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PROGRESS IN ADDRESSING MANAGEMENT

CHALLENGES AT THE DEPARTMENT OF

HOMELAND SECURITY

HEARING

OF THE

SELECT COMMITTEE ON HOMELAND 

SECURITY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MAY 6, 2004

Serial No. 108–48

Printed for the use of the Select Committee on Homeland Security

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html
SELECT COMMITTEE ON HOMELAND SECURITY

CHRISTOPHER COX, California, Chairman 

JENNIFER DUNN, Washington 

C.W. BILL YOUNG, Florida 

DON YOUNG, Alaska 

F. JAMES SENSENBRENNER, JR., Wisconsin 

DAVID DREIER, California 

DUNCAN HUNTER, California 

HAROLD ROGERS, Kentucky 

SHERWOOD BOEHLERT, New York 

LAMAR S. SMITH, Texas 

CURT WELDON, Pennsylvania 

CHRISTOPHER SHAYS, Connecticut 

PORTER J. GOSS, Florida 

DAVE CAMP, Michigan 

LINCOLN DIAZ-BALART, Florida 

BOB GOODLATTE, Virginia 

ERNEST J. ISTOOK, JR., Oklahoma 

PETER T. KING, New York 

JOHN LINDER, Georgia 

JOHN B. SHADEGG, Arizona 

MARK E. SOUDER, Indiana 

MAC THORNBERRY, Texas 

JIM GIBBONS, Nevada 

KAY GRANGER, Texas 

PETE SESSIONS, Texas 

JOHN E. SWEENEY, New York 

JIM TURNER, Texas, Ranking Member 

BENNIE G. THOMPSON, Mississippi 

LORETTA SANCHEZ, California 

EDWARD J. MARKEY, Massachusetts 

NORMAN D. DICKS, Washington 

BARNEY FRANK, Massachusetts 

JANE HARMAN, California 

BENJAMIN L. CARDIN, Maryland 

LOUISE MCINTOSH SLAUGHTER, New York 

PETER A. DEFAZIO, Oregon 

NITA M. LOWEY, New York 

ROBERT E. ANDREWS, New Jersey 

ELEANOR HOLMES NORTON, District of 

Columbia 

ZOE LOFGREN, California 

KAREN MCCARTHY, Missouri 

SHEILA JACKSON-LEE, Texas 

BILL PASCRELL, JR., North Carolina 

DONNA M. CHRISTENSEN, U.S. Virgin Islands 

BOB ETHERIDGE, North Carolina 

KEN LUCAS, Kentucky 

JAMES R. LANGEVIN, Rhode Island 

KENDRICK B. MEEK, Florida

JOHN GANNON, Chief of Staff 

STEPHEN DEVINE, Deputy Staff Director and General Counsel 

THOMAS DILENGE, Chief Counsel and Policy Director 

DAVID H. SCHANZER, Democrat Staff Director 

MARK T. MAGEE, Democrat Deputy Staff Director 

MICHAEL S. TWINCHEK, Chief Clerk

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C O N T E N T S 

Page 

STATEMENTS 

The Honorable Christopher Cox, a Representative in Congress From the 

State of California, and Chairman, Select Committee on Homeland 

Security ................................................................................................................. 1

The Honorable Jim Turner, a Representative in Congress From the State 

of Texas, and Ranking Member, Select Committee on Homeland Security .... 2

The Honorable Robert E. Andrews, a Representative in Congress From the 

State of New Jersey ............................................................................................. 26

The Honorable Norman D. Dicks, a Representative in Congress From the 

State of Washington ............................................................................................. 44

The Honorable Jennifer Dunn, a Representative in Congress From the State 

of Washington ....................................................................................................... 5

The Honorable Bob Etheridge, a Representative in Congress From the State 

of North Carolina ................................................................................................. 40

The Honorable Sheila Jackson-Lee, a Representative in Congress From the 

State of Texas: Prepared Statement ................................................................... 4

The Honorable Zoe Lofgren, a Representative in Congress From the State 

of California .......................................................................................................... 32

The Honorable Bill Pascrell, Jr., a Representative in Congress From the 

State of North Carolina ....................................................................................... 38

The Honorable John Shadegg, a Representative in Congress From the State 

of Arizona .............................................................................................................. 35

The Honorable Pete Sessions, a Representative in Congress From the State 

of Texas ................................................................................................................. 29

The Honorable Christopher Shays, a Representative in Congress From the 

State Connecticut ................................................................................................. 41

WITNESS 

The Honorable James M. Loy, Deputy Secretary, Department of Homeland 

Security 

Oral Statement ..................................................................................................... 6

Prepared Statement ............................................................................................. 10

APPENDIX 

QUESTIONS AND RESPONSES FOR THE RECORD

Responses from the Honorable James M. Loy: 

Questions from the Honorable Sheila Jackson-Lee ........................................... 54

Questions from the Honorable Louise M. Slaughter ......................................... 53

Questions from the Honorable John E. Sweeney .............................................. 47

Questions from the Honorable Jim Turner ........................................................ 50

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PROGRESS IN ADDRESSING MANAGEMENT 

CHALLENGES AT THE DEPARTMENT OF 

HOMELAND SECURITY 

Thursday, May 6, 2004

HOUSE OF REPRESENTATIVES, 

SELECT COMMITTEE ON HOMELAND SECURITY, 

Washington, DC. 

The committee met, pursuant to call, at 10:42 a.m., in Room 

2318, Rayburn House Office Building, Hon. Christopher Cox [chairman of the committee] presiding. 

Present: Representatives Cox, Dunn, Shays, Camp, Shadegg, Sessions, Turner, Dicks, Frank, Slaughter, DeFazio, Lowey, Andrews, 

Norton, Lofgren, McCarthy, Pascrell, Etheridge, Lucas, and Chandler. 

Chairman COX. [Presiding.] Good morning. A little over a year 

has passed since the Department of Homeland Security opened for 

business on March 1, 2003. With the stroke of a pen, the President 

and the Congress created the third largest cabinet department and 

with it a remarkably lengthy to-do list. The task that we set before 

the leaders of this new Department required creative thinking and 

extraordinary energy, as we are now keenly aware, also definite 

persistence. 

The Homeland Security Act not only created entirely new functions, such as intelligence fusion, infrastructure protection and 

cybersecurity that had to be built from scratch, but also required 

the merger of 22 government agencies into one coherent whole. 

That is a management challenge of the first magnitude. 

Secretary Ridge and you, Admiral Loy, have taken command of 

not one but many distinct organizations, each with its own operating culture and mission, and you have had to undertake this 

complex merger in a near constant heightened alert environment 

and while under unprecedented scrutiny from the administration, 

the Congress and the American public. 

There has been no greater challenge to leadership in any of our 

Federal agencies, and I want to commend the Secretary and you, 

Admiral Loy, for the remarkable progress that you have made in 

one short year. Some of the Department of Homeland Security’s accomplishments over the past year have been visible. Others have 

taken place behind the scenes. 

Everyone has been able to see our airports, seaports and borders 

hardened, and a good deal of publicity has surrounded the Federal 

government’s grants of billions of dollars for States, local governments and first responders to help prepare our communities for 
2

terrorist attacks. Less visible but just as important is the dramatic 

improvement in intelligence and information sharing among Federal agencies and their State and local partners. 

Today, we have asked Admiral Loy to join us to talk about all 

of these accomplishments and the many remaining management 

challenges. While the operational and analytical elements of the 

Department have been busy preventing and protecting us from terrorist attack, the Department’s managerial leadership has been developing an overarching strategic plan to guide the Department’s 

future. 

You have been working on integrating legacy systems and procedures in order to achieve a more centralized, mission-focused structure. This integration is critical to the long-term success of the Department and its mission to make America safer. It will be, therefore, a continuing focus of congressional oversight. 

Admiral Loy is the Deputy Secretary and the functional equivalent of chief operating officer who is leading this effort, and by all 

accounts your leadership is visionary and firm. Thank you on behalf of the American people for your dedication and hard work and 

we welcome your testimony today. 

Management Directorate, which Admiral Loy oversees, has been 

tasked with consolidating administrative support systems Department-wide and enhancing interoperability of the many legacy IT 

systems within the Department. We hope to learn more today 

about the effectiveness of these efforts and to offer our support to 

ongoing efforts to consolidate and integrate DHS operations as 

quickly as possible. 

This committee has an important role to play in working with 

the Department during this merger integration process. By focusing on milestones and setting goals for management improvements, 

this committee can help the Department to implement your strategic plan—a plan that is in place and that will build upon the successes of the past year. 

We look forward to working with you, Admiral Loy, on setting 

achievable goals and milestones for implementing your strategic 

plan and in making sure that this plan is tied to the 5-year budget 

that you will be submitting to Congress later this month. 

We also look forward to working with you as we continue to develop our DHS authorization bill. The committee clearly wants this 

authorization process to be an institutionalized means of helping 

the Department, now and over the long-term. As you know, one of 

the ideas that we have discussed is elevating the Department’s 

cross-cutting management functions into your office in order to provide clearer lines of authority and responsibility with respect to IT 

personnel, procurement, and finance functions. 

We will work with you to ensure that these and other reforms 

that we may adopt help you to do your job better, which is our 

goal. I thank you again for your appearance today and now recognize the ranking member, Mr. Turner from Texas, for an opening 

statement. 

Mr. TURNER. Thank you, Mr. Chairman. Welcome, Admiral Loy. 

We appreciate your presence here, and I know I speak for everyone 

on the committee when I say thank you for your continued service 

to our country. 
3

I know you face a daunting challenge in trying to oversee the integrating of the 22 legacy agencies and 180,000 employees, and I 

know it is a difficult job, and I know that you are well aware, as 

we all are, that some of the management challenges that you deal 

with are unique to your agency and that failure to carry them out 

correctly could subject us to serious exposures in terms of our national security, and I know you carry that burden every day. 

We are here today, of course, to try to review the progress of the 

Department more than one year after its establishment to review 

your achievements and to probe some of the remaining management challenges that we know must be overcome. 

I want to applaud you for your progress. The issuance of the first 

strategic plan earlier this year was a needed step, and I think it 

is clear the Department one year into its existence is much more 

mature today, and its structure seems to be gaining greater clarity. 

There are issues, of course, that we all know remain and some 

that have come to my attention, including my concern about the 

widely reported accounting irregularities involving a suspected $1.2 

billion shortfall, which we understand led two of your departments’ 

front-line units to declare a hiring freeze earlier this spring. I 

would like to know whether this suspected shortfall was the result 

of an internal accounting error or failure of coordination between 

Department components or whether it is really a true budget shortfall. 

With a total budget of $36 billion for this fiscal year, I know you 

agree that it is critical that the Department be able to account for 

its finances with precision and be overseen by a strong Chief Financial Officer. 

Information technology is another area that remains, I think, a 

management challenge. I am concerned the Department may be 

falling short on integrating the basic systems that would improve 

daily operations and improve information sharing and ensure that 

the Department is a unified and well run agency. It is troubling to 

me, as described by an official source in the press, that the Department may not know, for example, how many employees it actually 

has. And, obviously, that kind of information in the press undermines the credibility of the Department. And I am not sure I understand why that kind of information would not be in existence. 

I also find it somewhat troubling that the Chief Procurement Officer and the Chief Information Officer appear to be organizationally weak and may not have sufficient authority over the hundreds 

of legacy agency systems and functions for which they are responsible. 

I know there have been a number of initiatives made in this 

area, such as the Investment Review Board to examine purchases 

over $50 million, and additional reforms may be needed to ensure 

the Department’s purchases and use of IT are appropriately coordinated. 

I also am concerned with the reports that there is a high degree 

of turnover among executives in the IT and contracting areas. 

Clearly, such occurrences in high turnover would hamper the ability of the Department to accomplish its mission. 

And, finally, I want to briefly touch upon the new pay-for-performance system for employees. We all understand the vital mis-
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sion of protecting the homeland depends upon a highly skilled and 

highly motivated workforce. We know we can invest billions in 

technology, have the best strategies available, but, ultimately, our 

security lies in the hands of the dedicated men and women who 

work every day in your Department. 

I hope the Department continues to develop its human resources 

system, and as you do so seek to ensure fairness, transparency and 

employee involvement in the overall process. Unless our employees 

are appropriately compensated and experience job satisfaction, we 

know their morale will suffer and our homeland security will be 

compromised. As a former military officer, I know you understand 

very well the value of the highly motivated and dedicated workforce. 

The Department clearly has had to blaze a pathway into some 

unchartered territory in the last year. It has made some mistakes, 

but it is finding its way and it is making progress. And I know that 

through your leadership, Admiral Loy, along with Secretary Ridge, 

that the Department is committed to addressing each of the management challenges that I mentioned in accomplishing the vital 

mission of protecting our country. 

So our committee is here in a bipartisan way to help you accomplish your task. Only by letting us know what your problems are 

and where the Congress needs to step forward and help can we do 

our job to join with you in protecting our Nation. Thank you again, 

Admiral, for being here. Thank you, Mr. Chairman.

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON-LEE

I would like to thank Chairman Cox, Ranking Member Turner, and our witness 

today, Honorable James Loy for making today’s hearing happen. The subject of this 

hearing has been a harbinger of evil that we, unfortunately, must address if we expect to truly secure our nation before the next terror threat occurs or before another 

person is injured or killed. The thorough and proper integration of 22 separate agencies into one umbrella is no small task; therefore, there is always room for improvement. In this case, however, quick and complete improvements are necessary to save 

lives. The management and functional problems that existed when each pre-DHS 

division of government continue to exist now, and in fact, the integration of these 

divisions may have exacerbated a lot of those problems. For four (4) of the seven 

major agencies (i.e., Immigration and Naturalization Service (INS), Federal Emergency Management Agency (FEMA), Customs Service, Transportation Security Administration, the Office of Domestic Preparedness, the u.S. Coast Guard, and the 

Secret Service) that became DHS on March 1, 2003, auditors reported 18 material 

weaknesses (i.e., a condition that precludes the entity’s internal control from providing reasonable assurance that misstatements, losses, or noncompliance would be 

prevented or detected on a timely basis) in internal control for fiscal year 2002. In 

addition, for five (5) of the seven (7) major agencies, auditors reported that the agencies’ financial management systems were not in substantial compliance with the 

Federal Financial Management Improvement Act (FFMIA) of 1996. These statistics 

are very troubling when we think about the reality that the Homeland Security Act 

essentially conglomerated the material weaknesses and proven inability to comply 

with the FFMIA. 

For example, according to a GAO study released on September 10,2003 (GAO–03–

1134T) with respect with the former Immigration and Naturalization Service (INS), 

for both FY 2001 and 2002, auditors reported that INS did not have a reliable system for providing regular, timely data on the numbers of completed and pending immigration applications, and the associated collections of fees valued at nearly $1 billion for FY 2002! What this means is that over the course of these fiscal years, INS 

did not accurately or regularly determine the fees that it earns without relying on 

an extensive service-wide, year-end physical count of over 5.4 million pending applications. Supposedly, INS has been working on a new tracking system to facilitate 

its inventory process. I would like to know the progress of this system. How can we 

realistically rely on the Administration’s newly announced immigration policy when 
5

we know from the above data that it may well have been created based on significantly estimated performance and fee data? 

In addition, relating to the problems arising from the conglomeration of the different agencies and from a conversation that I had with a member of the Houston 

Airport System, there needs to be an ‘‘intermodal law enforcement mechanism’’ to 

ensure that law enforcement is in a position to react quickly once the magnitude 

of the emergency has been determined. For example, at Bush Intercontinental Airport in Houston, there is a concern that more law enforcement agents are needed. 

When an emergency arises that falls outside the scope of the Houston Police Department’s (HPD’s) jurisdiction, the Federal Bureau of Investigation (FBI) is the next 

first responder to receive the call of duty. This period of problem identification and 

jurisdiction determination creates a time lag that puts lives in serious jeopardy. The 

FY 2004 budget did not fund the addition of law enforcement personnel, so we are 

now in a quandary. 

In addition, with respect to the hiring cap for professional and administrative positions at TSA for airports, I spoke with a constituent at the Houston Airport System and he complained that the cap is creating a major source of vulnerability. 

Houston has 3 airports, and two of them are considered ‘‘high traffic’’ or extremely 

busy. Furthermore, at Bush Intercontinental Airport, there is a proposal to add as 

many as 18 new TSA checkpoints in the expansion of its international wing. With 

this kind of expansion at other airports around the nation coupled with ever- increasing air travel, we need to make some serious changes in the way TSA and 

other divisions manage their duties. 

I hope that we can arrive at some positive solutions to these problems so that the 

vulnerabilities that are being created don’t escalate. 

Thank you.

Chairman COX. Thank the gentleman. The Vice Chairman of the 

full committee, the gentlelady from the State of Washington, Ms. 

Dunn. 

Ms. DUNN. Thank you very much, Mr. Chairman. After the tragic 

events on September 11, Congress and the President acted swiftly 

to create the Department of Homeland Security, a department designed to remedy internal government problems and to make it 

much more difficult, if not impossible, for terrorists to assail our 

way of life. 

The issue of homeland security was not at the front of most 

Americans’ minds before the attacks on September 11, and the organization of Federal government reflected that fact. September 11 

was our wake-up call, and the President and the Congress answered that call. 

The Department of Homeland Security is a demonstration of our 

commitment to protect Americans and to prepare in case of another 

attack. Creating the Department of Homeland Security has been a 

gigantic undertaking. Mergers of this magnitude are unusual if not 

unprecedented, whether we are talking about the private sector or 

the public sector. DHS combined the efforts of 22 separate entities, 

all responsible for some piece of the security puzzle, into one department focused on a new mission—to protect our homelands. 

Today, we look to the Deputy Secretary of the Department of 

Homeland Security, Admiral Loy, to guide us through the management strategy for continuing to build a strong and focused Department. We know that managing 22 legacy agencies and organizations is an extraordinary assignment. We understand the structural and cultural barriers that hinder transformation in a merger 

situation. We applaud the leaders of the Department for making 

significant progress over this last year, and we are here to support 

and encourage Department-wide implementation of mission-driven 

policy. 
6

The mission of the Department of Homeland Security is perhaps 

the most important mission that we, the Federal government, will 

ever undertake. I am pleased that we have individuals like Admiral Loy leading the effort, because I know he also understands it, 

and I look forward to your testimony, Admiral Loy. 

Chairman COX. Thank the gentlelady. I would advice members 

that Admiral Loy has agreed to be with us for this hearing till 

12:30. All members are free to make opening statements under our 

rules. Those members who waive opening statements will have an 

additional 3 minutes added to the time allotted for their questions. 

And so at this time, I would ask if there are further opening statements? 

If not, Admiral Loy, we have, of course, your prepared testimony, 

and you are recognized for purposes of summarizing it for us orally. 

STATEMENT OF THE HONORABLE JAMES M. LOY, DEPUTY 

SECRETARY, DEPARTMENT OF HOMELAND SECURITY 

Admiral LOY. Thank you, Mr. Chairman. Chairman Cox, ranking 

member Turner, distinguished members of the committee, I am 

pleased to appear at the hearing of the House Select Committee on 

Homeland Security. The Department of Homeland Security appreciates the support we have received from this committee as we 

have worked with you to establish and refine this Department in 

support of our unified effort nationally to prevent and deter terrorist attacks and to protect against and respond to threats and 

hazards of all kinds to our Nation. 

Authorizing oversight from the Congress is an enormously important function. It provides ideas, and it provides the reinforcement 

of direction and provides programmatic support as part of the annual dialogue between the executive and the legislative branches. 

Secretary Ridge and I and the rest of DHS recognize the value of 

that discourse and we try to look forward to holding up our end of 

the conversation. 

The Department of Homeland Security has indeed made, we believe, significant organizational strides during the first year of our 

operation. Nearly 180,000 employees and a budget of over $31 billion were brought under DHS just a little over a year ago. 

We are in the midst really of three full-time jobs at the Department. First, we are executing the merger that has been described—

22 executive branch elements coming into one cabinet-level agency. 

Second, we are trying to do that without detrimental impact on 

mission accomplishment; in fact, our challenge, of course, is to 

make significant improvements in meeting that mission. And, 

third, and last, we are forging a new identity in culture, born in 

the ashes of September 11, 2001 and dedicated to ensuring to the 

very best of our ability that such events never recur. 

Any one of these challenges is a very heavy lift. All three together properly draw the attention of many to applaud, to constructively criticize or to wonder aloud as to what it is that we are really 

doing. That review is welcome. We certainly do not have a corner 

on the market of good ideas, and although we are very proud of 

what we have gotten done this past year, we still know we have 

a long way to go, and we welcome the assistance of all to help us 

secure America. 
7

I believe the committee interests cross all three of our challenges, 

but I also sense that today we are principally interested in governance. Setting up the management structure of DHS was debated 

well, of course, in the creation of the Homeland Security Act. On 

the other hand, as often is the case, every bill is not perfect, and 

there are areas properly available for us to review, and I look forward to that discussion. 

I would like to just offer quick comments in three areas and then 

take your questions. First, there are many noteworthy accomplishments to review from year one. Among the Department’s accomplishments in consolidating inherited support systems during its 

first year are these: 8 payroll systems that have been reduced to 

3, and the Department expects to be using only 1 system by the 

end of 2004; 22 human resource offices that have been reduced to 

7; 13 contracting offices that have been reduced to 8; 19 financial 

management service providers that have been reduced to 10. 

DHS has initiated an ambitious management initiative called 

eMerge2, designed to produce a consolidated enterprise solution for 

a variety of administrative functions, including accounting, budgeting and acquisition. 

DHS has instituted and designed the Future Years Homeland 

Security Program, the FYHSP, the parallel, if you will, to the Department of Defense’s FYDP, with the goal of tying overall strategy 

to a 5-year resource plan outlining long-range goals and resource 

requirements. 

In February, the Department proposed new regulations for 

human resource management. The goal of the effort was to design 

a flexible and competitive system viewed as an opportunity to take 

an historic step in Federal government employment policy. The 

public comment period at the tail end of this project ended on 

March 22, 2004, but I must say how proud we are at the inclusive 

nature of that process from beginning to end. 

We had an 80-person team that was designing this new system. 

That team included representatives from all walks of not only our 

Department but the unions that represent our employees and everyone else that we felt had an equity in the system along the way. 

There are over 3,500 comments now in the public docket from 

the comment period, and at the present time DHS and OPM, our 

partner in this effort, are analyzing those comments. Officials hope 

to issue final regulations later this year after the meet-and-confer 

process has concluded. Following the issuance of final regulations, 

the system, as proposed, will be phased in over several years. 

We have also made progress in consolidating and integrating 

operational programs. For example, there is currently now on the 

shelf an interim national response plan and a national incident 

management system. There is in final review the first formal 

version of that national response plan. This represent an effort to 

consolidate from as many as 12 different contingency plans which 

used to be on the shelf a single way that this Department will coordinate the requirements associated with any national hazard, 

manmade or otherwise, that comes towards this country’s direction. 

The Department has taken steps towards consolidating its first 

responder grants and programs; as Mr. Turner mentioned, those 

grants and programs that support the first responder community, 
8

always the first on the scene and most often the last to leave any 

kind of an event. The One Face at the Border Program was designed and implemented consolidating three very different border 

inspection functions into one. That has now proven itself over 

months of use as to be a constructive change to the way we welcome people through the portals of our country. 

Several programs and ideas that were free-standing and set 

asides of themselves have now been integrated to forge a curb-tocockpit system of aviation security for our Nation that is admittedly not yet complete but is, oh, so much better than that which 

was in place on that day back in September of 2001. 

It still remains clear that we have challenges that lie ahead. I 

would offer that information technology, further systems integration, information sharing, and issues about interoperability are 

areas that continue to deserve and receive serious attention in the 

Department. These are initiatives underway that have not culminated in a final game plan as to how best to do them. More on 

that thought in just a moment. 

A secondary of attention from my opening remarks is vision. As 

the chairman mentioned, on the occasion of the first anniversary 

of this Department in 1 March, the Secretary published our first 

strategic plan. This was an effort undertaken by the leadership 

cadre of the Department—off-site together, no facilitators in place, 

just us trying to figure out the best way to forge our future. 

The national strategy for homeland security and the Homeland 

Security Act of 2002 served to mobilize and organize our Nation to 

secure the homeland from terrorist threats. To be successful, complex missions required a focused effort from all society. This is an 

all-hands evolution for our country. 

One primary reason for the establishment of the Department was 

to provide the unifying corps for the vast national network or organizations and institutions involved in efforts to secure our country. 

In order to better do this and to provide guidance to the 180,000 

men and women in the Department who work every day on this 

important task, the Department found itself required to develop its 

own strategic plan. 

The new vision and mission statements plus the strategic goals 

therein will provide the framework for the thousands of action 

items that will focus to daily operations of the Department. I would 

trust that each of you have seen copies of our plan at this point. 

We will certainly make sure they are sent to you if you have not. 

The vision, very clearly: Preserving our freedoms, protecting 

America, we secure our homeland. I think its simplicity offers 

focus. Our mission: We will lead a unified national effort to secure 

America. We will prevent and deter terrorist attacks and protect 

against and respond to threats and hazards to the Nation. We will 

ensure safe and secure borders, welcome lawful immigrants and 

visitors and promote the free flow of commerce. 

The core values of the Department of Homeland Security are personal attributes expected of every employee. I watched it work almost magically with my service in the Coast Guard for over 40 

years. Core values are enormously important as that third job we 

undertake to build DHS identity and culture. 
9

Those are simply three: Integrity, service before self, each of us 

serves something far greater than ourselves; vigilance guarding 

America, relentlessly identifying and deterring threats that pose a 

danger to the safety of our people; respect, honoring our partners, 

honoring the concepts for which America stands—liberty, democracy, civil rights—and act on such things as our constitutional duty 

requires. 

And seven action oriented strategic goals: Awareness, prevention, 

protection, response and recovery and then service and organizational excellence as mandates from the Secretary to all of our workforce to take us where we want to go. 

Objectives are arranged under each goal, and there are literally 

hundreds of milestones, activities and projects associated with each 

objective. Our planning mandate is to link each and every such activity and project to a line item in the 2006 budget as it comes forward and display its owner and timeline to any and all who would 

look. 

I personally review those milestones monthly and demand the 

metrics necessary for objective monitoring of progress. This strategic plan has given the DHS workforce the confidence of knowing 

where their work fits into the big picture and the comfort that it 

all makes sense and that the boss has a solid game plan and the 

will to exercise it. 

And, lastly, Mr. Chairman, I offer this simple notion that a department like ours with thousands of very important activities 

must take the time to prioritize our work. Secretary Ridge gave us 

all kudos for work well done in year one and then quickly delivered 

a set of seven key priorities for us to concentrate on in year two. 

They are information sharing and infrastructure protection, interoperability, integrated ports and borders, new technologies and 

tools, better prepared States and communities, improved customer 

service for immigrants and a 21st century department. 

I will leave that list just on the table as a menu of things that 

you perhaps would like to discuss, but please know we have taken 

each of them, made a senior department official personally responsible for it, had a 20-page paper developed that described our intention for specific goals, responsible owners and milestones. We 

turned a solid information brief to the Secretary to be sure we were 

on the right track, and in several instances are setting up program 

shops to manage our progress in that subject area. 

Mr. Chairman, there has been a tremendous amount accomplished since this Department was created, and we are cognizant 

of how much more work remains to be done. I tried to identify several areas as I prepared my testimony where the Congress might 

look to help us. 

One of the biggest challenges that faces us at the moment, in 

particular, is the need to consolidate the Department’s headquarters location in a single place. This co-location will serve to improve communications, provide efficiencies and better establish our 

identity as a department. We are working with the Armed Services 

Committees to expand our presence at the Nebraska Avenue complex, and I seek your support to that end. 

Beyond that, we have asked Congress to delay the deadlines for 

biometrically based passports to be mandatory at our borders. I 
10

personally wonder if high consequence areas like nuclear, biological 

and cyber are properly organized and recognized in the Department. I even wonder if adequate attention can be given to major 

policy judgments from a small shop well hidden inside the Chief of 

Staff’s organization. 

These are just a few of the areas the Secretary will seek your 

support on as we take stock after year one and try to make adjustments to how we do business. Mr. Chairman, thank you for allowing me to run on just a bit. There is just an incredible array of 

work being done and to be done in this new department. 

Again, we are proud of our work so far, appreciative of the committee’s support, but mostly the Secretary and I are proud of our 

workforce—180,000 plus strong who day after day make their contribution to securing our homeland. They deserve the resources and 

support they need to do their work and the very best leadership 

and management that we can muster. We are trying hard to give 

them that every day. 

I look forward to your questions, and thank you very much, Mr. 

Chairman, for allowing me to make an opening statement. 

[The statement of Admiral Loy follows:]

PREPARED STATEMENT OF ADMIRAL JAMES LOY

Chairman Cox, Ranking Member Turner, distinguished members of the Committee—I am pleased to appear at this hearing of the House Select Committee on 

Homeland Security. The Department of Homeland Security appreciates the support 

we have received from this Committee as we have worked with you to establish and 

refine this Department in support of our unified national effort to prevent and deter 

terrorist attacks and protect against and respond to threats and hazards to the nation. 

I would also like to acknowledge the tremendous work of the Department’s management team and their dedicated staff in keeping DHS on track and focused on 

our ultimate goal of transforming a formerly disparate set of organizations into a 

cohesive 21st century Department. 

This reorganization of government has presented the biggest ‘change management’’ challenge of all time. Never before have we witnessed a full-scale government 

divestiture, merger, acquisition and startup all coming together at once—certainly 

not on this scale. Neither have we seen a consolidation of this size occur with such 

national importance and urgency and in such a short amount of time. 

Our biggest challenge was to establish the Department, transfer her employees 

in from other agencies, and establish a working organizational environment while 

making sure that we did not lose a step in accomplishing all of the critical missions 

with which we were charged. 

This reorganization and transition required looking beyond old agendas, missions, 

cultures, histories and processes... and coming together as one holistic enterprise. It required—and finally enabled—employees from many different organizations to rally around a single mission: to deter and prevent terrorist attacks, to protect our people and infrastructure and respond to threats and hazards to our nation 

in a way that is respectful of individual privacy and civil liberties... ultimately, 

to secure borders, but also keep open the doors so characteristic of, and essential 

to, this welcoming and economically thriving country. 

In the post 9/11 world, our employees renewed their respect for the importance 

of their jobs and recognized the need to do them differently and better. And so our 

charge was to unify that sense of purpose and mission. Our charge was to make 

it easier for them to do their jobs and, as a nation, approach the protection of our 

people and our way of life in a smarter, more effective and more efficient way. 

When the President laid out his direction and the Congress created the Department of Homeland Security, the expectations were clear that this Department be 

unlike any other within the federal government. At the core of these expectations 

was the priority of developing a model agency for the new century that supports in 

an effective, efficient and rational manner the unified national effort to secure 

America. 
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In order to respond to new and different 21st century threats, this Department’s 

organizational identity must incorporate the characteristics of flexibility, innovation, 

efficiency and responsiveness. The Department’s ability to become a modern, agile, 

and integrated organization is essential to adequately support this Department in 

its efforts to confront the challenges of the new century in a bold way. 

The definition of a 21st century Department is a consolidated and focused Department that seeks to integrate, with laser-like precision, the various resources and efforts across the federal government in order to prevent, protect against and respond 

to terrorist attacks that threaten the American way of life. Inherent in this definition of a 21st century Department is the need for DHS to be organized and to be 

able to provide the highest quality of support service for the men and women on 

the front lines in the war on terrorism. Just as this Department was created to execute a mission unlike any other agency in government, so should the delivery of 

service be as unique in supporting this critically important mission. 

The Department of Homeland Security has made great organizational strides during the first year of operations. Nearly 180,000 employees and a budget of $31.2 billion were brought under DHS a little more than a year ago. 

At the same time, from the start, we also had to remain focused on our operational activities—that is, while we worked swiftly to get servers up, systems consolidated, a stapler on every desk—we had to be squarely focused on the protection 

of the country. 

Operationally, one of the top priorities achieved by the Department was to integrate specific departmental functions to enhance efficiencies and create greater accountability in one seamless border service. For the first time in the country’s history, all agencies of the United States Government with significant border responsibilities have been unified into one agency of our government, Customs and Border 

Protection (CBP); one agency, one face, to manage and secure the Nation’s borders.

Strategic Planning, Financial Management, & Budget 

The Department’s first high-level Strategic Plan was released in February. This 

Strategic Plan sets forth the vision and mission statements, core values, guiding 

principles and strategic goals and objectives that provide the framework to guide the 

actions that make up the daily operations of the Department. The full breadth of 

our activities is guided by the high-level goals of: Awareness, Prevention, Protection, 

Response, Recovery, Service, and Organizational Excellence. 

The Department’s Strategic Plan reflects the determination of our nation to prevail against terror, to protect our homeland and to improve the way we serve our 

diverse customers. Describing who we are and what we do, it conveys the beliefs 

and values that govern our conduct. It outlines what we will accomplish. This document provides the vision and direction, as well as the goals and objectives for the 

Department while our detailed budget plan describes how we will achieve those results. Each program in the budget plan will be linked to our goals and objectives 

and will have timelines and ownership associated with specific performance. 

One of the biggest strategic challenges currently facing DHS is the need to consolidate the Department’s headquarters operations in one location. This collocation 

will significantly improve the communications, efficiency, and effectiveness of the 

Department’s management and day-to-day direction. Without Congressional approval, however DHS cannot fully move into its preferred headquarters—the Nebraska Avenue Complex (NAC), which is currently an active military base. DHS, the 

Navy, and the General Services Administration have jointly submitted a legislative 

proposal to establish the DHS headquarters at the NAC. We believe Congress 

should pass this legislation as a stand-alone bill so that the Department can consolidate its headquarters as soon as possible. Every day that DHS fails to consolidate 

its operations, the Department is hobbled in achieving its ultimate goal of protecting 

the American people and the homeland. 

Equally important to this Department is sensible financial management and sensible financial management requires informed financial and management decisions. 

To ensure policy decisions are made based on sound rationale, such as a program’s 

contribution to our strategic goals and measurable results, DHS has put in place 

a comprehensive planning, evaluation, and investment review process. 

At the core of this process is the Future Years Homeland Security Program—

FYHSP. Section 874 of the Homeland Security Act of 2002, requires the Department 

to prepare the FYHSP. The FYHSP process will help ensure that current and out 

year program requirements are properly identified, planned, and aligned with DHS 

goals and priorities and have measurable meaningful performance outcomes. The 

Department’s first FYHSP is expected to be provided to Congress this month. 

In the past year, an Investment Review Board (IRB) and Joint Requirements 

Council (JRC) were established. The JRC identifies crosscutting opportunities and 
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common requirements among DHS Organizational Elements for investments and 

aids in determining how best to ensure that the Department uses its resources wisely and in the best interest of the American public. The IRB is an executive committee that reviews high-level investments for formal entry into the annual budget 

process and also serves as a forum for discussing investment issues and resolving 

problems requiring senior management attention. Specifically, the IRB and JRC review major capital investments to:

• Integrate Departmental priorities, resource planning, investment control, 

budgeting, acquisition, and investment management to ensure resources are 

wisely used. 

• Ensure that spending directly supports and furthers DHS’s mission and provides optimal benefits and capabilities to stakeholders and customers. 

• Identify poorly performing programs and investments so corrective actions 

can be taken. 

• Identify duplicative efforts for consolidation and mission alignment when it 

makes good sense or when economies of scale can be achieved. 

Over the past year, DHS has streamlined the number of financial management 

service providers in the Department from nineteen to ten with a continual focus on 

further consolidations. We are implementing a consolidated bankcard program that 

is reducing the significant number of bankcard programs for purchase, travel, and 

fleet throughout the Department among the 22 legacy entities to three. We developed and delivered to Congress on time, the Department’s FY 2005 President’s 

Budget and accompanying Congressional Justifications. We subjected ourselves to, 

and successfully completed, an audit of our consolidated FY 2003 financial statements. We have also made strides in our attempt to build one financial system for 

the Department. Most importantly, all of this has been accomplished with no negative impact on mission operations. 

Essential to sound financial management is a sound and robust financial management system. When DHS was created, we inherited over 100 resource management 

systems from the 22 organizations that were merged to create DHS. Few of these 

systems are integrated, several are outdated and many have limited functionality. 

To address this problem, the Department has undertaken a resource transformation 

initiative entitled eMerge2. The goal of eMerge2, which stands for ‘‘electronically 

Managing enterprise resources for government effectiveness and efficiency’’, is to improve resource management and enable the bureaus to move ‘‘Back Office’’ effectiveness and efficiency to ‘‘Front Line’’ Operations. 

eMerge2 is a business-focused program that seeks to consolidate and integrate the 

Department’s budget, accounting and reporting, cost management, asset management, and acquisitions and grants functions. Once procured and developed, the solution will be rolled out in several phases focusing first on those organizations most 

in need of improved basic financial management services. eMerge2 is currently in 

the midst of an exhaustive requirements definition and design phase, which is expected to evolve into a solutions acquisition phase this summer. As eMerge2 is implemented over the next few years, it will greatly enhance Departmental visibility, 

oversight and accountability of component operations and financial management. 

Holding managers accountable for achieving established goals and results is integral to DHS’s financial management and planning. Towards this end, the performance budget forges a strong link between resources and performance, shows what 

is being accomplished with the money being spent, and establishes accountability 

for the levels of performance achieved. The Program Assessment Rating Tool 

(PART) complements the performance budget by providing the Department an objective means of assessing the value and contribution of individual programs to achieving the Department’s objectives. It also provides a tool for assessing how the program is being managed.

Shared Services 

In July 2003 an integrated project team was established to realign and transform 

support services for the 68,000 mission delivery employees assigned to Immigration 

and Customs Enforcement (ICE), Customs and Border Protection (CBP), and Citizenship and Immigration Services (CIS). This was especially difficult because ICE 

was highly decentralized, and CBP was highly centralized. The team was to develop 

a basis for shared services, consolidate services where appropriate to realize economies of scale, and ensure accountability. The result was that CIS, ICE, and CBP 

each became primary service providers for selected services. For example, CBP provides facilities acquisition and management, ICE provides supervisory leadership 

training, and CIS provides records management. For some services, however, the 

three components remain self-supporting. Those services include procurement, per-
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sonal property, budget, and labor and employee relations. This effort within the Department is referred to as the ‘‘Tri-Bureau’’ effort. 

On March 1, 2003, DHS faced the daunting task of supporting 22 different components receiving services from nine different parent agencies. To provide continuity 

of service, DHS signed Memoranda of Understanding (MOU) with each of the parent 

agencies to continue that support. Then, on May 1, the Under Secretary for Management established a transition team to consolidate support services throughout the 

department. The team identified 255 unique services in the 22 components and DHS 

headquarters resulting in 3,457 separate services requirements. The services were 

catalogued under eight lines of business: administrative services, human resources, 

information technology, procurement, financial management, civil rights, legal, and 

security. By October 2003, the department was supporting 1463 of the 3457 services, and it is the expectation that most of the services will be provided by DHS 

by the end of FY 2004. 

The Department’s Office of Administrative Services has been able to consolidate 

35% of Administrative Services functions through the Tri-Bureau effort. Additionally, DHS has consolidated 22 different personal property management systems 

down to 3 and will utilize one, single property management system with implementation of the emerge2 initiative. 

The Department has also managed to consolidate 22 different processes for each 

administrative support service across the Department, such as mail, printing, vehicles, etc., down to 8 processes. Further implementation of the shared services strategy utilized under the Tri-Bureau effort will allow even further consolidation of 

these processes to occur. 

The consolidation of processes and systems supports the DHS goal of being a 21st 

century Department. Above all, supporting the DHS organizational elements in 

their mission is the top priority. The use of national standards, proven management 

controls, and a practice of continuously improving program performance are enabling the Office of Administrative Services to effectively develop and implement a 

consolidated approach for the management of DHS safety, environmental management, records and publications, real property, personal property, and mail operations. 

For example, asset management and mail management consolidation studies are 

currently underway within the Department. The intent of the real property consolidation studies, as part of our overall asset management plan, is to assess and analyze the Department’s real property portfolio to develop the most effective and efficient profile that best supports the organizational mission. 

The Asset Management Board is responsible for coordinating and reviewing the 

policies, procedures and utilization of the physical assets of the Department including real and personal property. The board ensures consistent priorities for capital 

improvement projects at all levels. In addition, the Board oversees a system of asset 

program councils that bring together program experts and users to define guidance, 

metrics and requirements. These councils serve multiple roles: program management oversight and control, strategic sourcing initiatives, and development of new 

joint requirements. 

Additionally, integrated and standardized mail handing and management processes are currently under development to improve the security, movement, and delivery of mail across DHS, and the development of consolidated mail facilities are 

already improving the productivity and safety of the DHS mail operations.

Procurement & Acquisition 

Within the procurement and acquisition arenas, the Department has consolidated 

acquisition support for the 22 legacy agencies within 8 major procurement programs 

within DHS. Acquisition support for S&T, IAIP, CIS, ODP, the Office of the Secretary and Under Secretary for Management, as well as other headquarters customers has been consolidated within one major acquisition program. 

DHS is currently managing several complex enterprise-wide acquisition programs. 

The U.S. Coast Guard’s Integrated Deepwater System (IDS) Program, for example, 

is one of the largest performance-based acquisition programs in the United States. 

The Coast Guard, one of the nation’s five armed services, is a military, multi-mission, and maritime service within the Department of Homeland Security. This service is responsible for the protection of the public, the environment, and U.S. economic and security interests in the maritime domain—including America’s coasts, 

ports and inland waterways as well as international waters. 

In order to meet America’s 21st-century maritime threats and challenges, the 

Coast Guard initiated the Integrated Deepwater System (IDS) Program in the late 

1990s. The Deepwater Program is intended to provide the capability and capacity 

for the Coast Guard to meet all maritime missions legislatively mandated in the 
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Homeland Security Act. Deepwater assets are needed to perform missions in ports, 

waterways, coastal areas, and extending seaward to anywhere the Coast Guard 

needs to take appropriate action and respond 24 hours a day, every day, in various 

environments from Arctic to tropical and equatorial climates throughout the world. 

The Deepwater Program will recapitalize and transform the Coast Guard to ensure 

it has the necessary platforms and systems to continue to meet these and future 

missions and sustain its operational excellence well into the 21st century. 

The Office of Small and Small Disadvantaged Business Utilization (OSDBU) has 

created a robust and innovative outreach program for its constituency. Outreach includes counseling on how to market to DHS and its buying activities and provides 

opportunities for these small businesses to engage both federal government employees and large business concerns that may be interested in the supplies or services 

these firms offer. The OSDBU has conducted extensive outreach to the Department’s business partners and has assisted in the development of a website designed 

to assist the private sector in realizing business opportunities with the Department. 

DHS has also implemented new and consolidated acquisition policies and procedures (Homeland Security Acquisition Regulations and Homeland Security Acquisition Manual) that are among the most flexible in the entire federal government. 

Under them, simplified selection procedures are authorized for ‘‘commercial item’’ 

purchases of $7.5 million or less—that’s 50 percent higher than most agencies—and 

red tape can be slashed altogether for so-called ‘‘micro-purchases’’ under $7,500, triple the normal amount. Publication of this regulation and guidance was another 

major step in combining the cultures of 22 disparate agencies by ensuring that these 

organizational elements now operate under a single, DHS-wide program regulation. 

We’ve also established a department-wide program for strategic sourcing and supply chain management. Specifically, DHS has initiated 14 cross-functional commodity councils tasked with creating sourcing strategies for goods and services acquired throughout the Department. Councils govern a wide range of requirements, 

from simple items such as office supplies, to more sophisticated requirements, such 

as boats and their maintenance, or complex IT infrastructure needs. Accrued savings in excess of $1M is expected for consolidation of handgun testing requirements. 

Combining office supply needs will result in realized savings of 55 percent off retail 

pricing arrangements. For DHS Headquarters alone, approximately $750,000 was 

saved over a six month period. Significant savings have been realized in the early 

stages of this initiative—for FY 05, a total of $100 million is expected to be realized. 

In February of 2004, DHS announced its partnership with the Department of Defense’s EMALL program, which is an internet-based marketplace that allows purchasers to access DoD’s wide variety of vendors and catalogs and enhances DHS’ 

ability to provide a one-stop shopping experience to acquire the goods and services 

needed to support DHS’ mission. The partnership with DOD EMALL enables DHS 

to participate in one of the largest existing government-to-business exchanges and 

will result in a projected savings for the Department in FY 05 of $8 million.

Human Capital 

In the area of human capital, we have made tremendous strides towards organizational efficiency and unified policy. The Department has managed to consolidate the 

22 different human resource servicing centers that existed and reduced the number 

down to seven with the goal of consolidating down to three or fewer of these centers. 

Additionally, the eight different payroll systems have been consolidated down to 

three, with the goal of utilizing one, single payroll provider for the entire Department by Spring 2005. 

Our Human Capital office has also established unified policies on performance 

management and Senior Executive Service performance appraisals. 

As the Congress recognized with the passage of the Homeland Security Act, DHS 

has been given a critical responsibility. Our mission is to protect the country from 

terrorists and keep terrorists? weapons from entering the country. We can’t afford 

to fail. We need the ability to act swiftly and decisively in response to critical homeland security threats and other mission needs. It is essential that we continue to 

attract and retain highly talented and motivated employees who are committed to 

excellence—the most dedicated and skilled people our country has to offer. The current system is too cumbersome to achieve this goal. 

The existing system was designed for a different time. The world has changed, 

jobs have changed, missions have changed... and our HR systems need to change 

as well to support this new environment. The current system, while it has many 

positive features, is insufficient to meet our needs. 

The Department, in conjunction with OPM, had an historic opportunity to design 

a system that meets our critical mission requirements and is responsive to DHS employees. We understood Congress’ desire to allow employees to participate in a 
15

meaningful way in the creation of a new system. With OPM Director James’ support 

and leadership, we engaged in an unprecedented collaborative effort to create the 

new system. Over 80 DHS employees, supervisors, union representatives and OPM 

staff were appointed to a Design Team. During the spring of 2003, that team conducted 64 nationwide town hall and focus group meetings to gain input from employees in all major DHS components. They also contacted over 65 public and private sector organizations and human resource experts as part of their research. The 

Secretary appointed a Senior Review Committee to guide the work of the Design 

Team and to review all the options developed by the Team. The Committee included 

both DHS and OPM leaders and the three Union Presidents from the largest DHS 

unions. 

In developing these proposals for a new human resource management system, the 

Secretary and the Director accepted the guiding principles developed by the Senior 

Review Committee and the Design Team. These principles state that the Department of Homeland Security must ensure, first and foremost, that such systems are 

mission-centered. Such systems must be performance-focused, contemporary, and 

excellent. They must generate respect and trust; they must be based on the principles of merit and fairness embodied in the statutory merit system principles; and 

they must comply with all other applicable provisions of law. We have worked hard 

to solicit the input of our employees and their representatives, the general public, 

and other interested parties during the thirty day public comment period. 

We are proposing a system that has a stronger correlation between performance 

and pay and greater consideration of local market conditions. Our proposal contains 

three major changes to the current General Schedule pay structure: first, we have 

proposed open pay ranges eliminating the ‘‘step increases’’ in the current system 

which are tied to longevity; second, we are proposing that pay would be adjusted 

by job type in each market not across all job types in each market; and third, we 

are proposing to create performance pay pools where all employees who meet performance expectations will receive performance based increases. 

The proposals for performance management are designed to foster high levels of 

performance and to ensure that good performance is recognized, rewarded, and reinforced. The system will be designed to make meaningful distinctions in performance 

and to hold employees accountable at all levels. We are proposing to phase in the 

performance management system before making any adjustments to pay based on 

that system. We are fully cognizant that this is one of the biggest challenges that 

lies ahead and that there is detailed work that must be done before we can implement the new system. 

Our proposed labor relations construct meets our operational needs while providing for collective bargaining and encouraging consultation with employee representatives. One of the most significant changes which we have proposed is the 

scope of bargaining over management rights. In the face of a committed and unpredictable enemy, the Department must have the authority to move employees quickly 

when circumstances demand; it must be able to develop and rapidly deploy new 

technology to confront threats to national security; and it must be able to act without delay to properly secure the Nation’s borders and ports of entry. We propose 

that the Department not be required to bargain over the exercise of these rights. 

Our proposal provides for consultation with employee representatives both before 

and after implementation when circumstances permit. We have proposed to retain 

the same bargaining obligations as we have today concerning the exercise of the remaining management rights. 

We recognize that these are significant changes. They are necessary for the Department to carry out its mission and fulfill the requirements of the Homeland Security Act to create a 21st century system that is flexible and contemporary while 

protecting fundamental employee rights. We have developed these proposals with 

extensive input from our employees and their representatives. And we continue to 

encourage a dialogue as we proceed through the regulatory process. 

The comment period for the proposed regulations closed on March 22nd—there 

are approximately 3,500 comments in the public docket including comments from 

members of Congress, the unions representing DHS employees, other employee 

groups, individual employees, and members of the general public. Those comments 

are being analyzed at this time. 

As required by the Homeland Security Act, DHS and OPM are reviewing all the 

recommendations from employee representatives and will prepare, after full and fair 

consideration of those recommendations, a Congressional notification which highlights those recommendations which have been accepted and those which have not 

been accepted. 

DHS and OPM have worked with the Director of the Federal Mediation and Conciliation Service to draft procedures to govern the legislatively-mandated ‘‘meet and 
16

confer’’ process—we will be reaching out to employee representatives who commented on the proposed regulations to include them in this process as appropriate. 

Additionally, DHS and OPM have continued to have discussions with the three 

major unions representing DHS employees—to ensure a clear understanding of their 

joint comments and to agree on the process going forward. 

We hope to issue final regulations later this year after the meet and confer process has concluded—and to begin, as indicated in the preamble to the proposed regulations, a phased approach to implement the regulations across DHS. We have 

asked for over $100 million to support the implementation of the regulations including monies to support training of our managers in the new system—implementation 

will continue throughout the next two fiscal years. 

In the interim, our employees continue to do outstanding work on behalf of the 

American people. We are proud of all we have accomplished in our first year. And, 

we are especially proud of the employees who have made it possible.

Information Technology 

Information technology will provide the Department of Homeland Security a competitive edge as it transforms into a 21st century agency. There is no mission endeavor that will not benefit by exploiting information technology to prevent terrorism, or to facilitate the movement of goods and people. Whether it is sharing the 

latest geo-spatial data with our federal, state, local, and tribal partners, or processing immigration benefits, information technology will enable smarter, more customer friendly solutions for America. Further, modern back-office systems to provide 

a responsible accounting of the taxpayers? funds and to manage a highly motivated 

workforce must be deployed quickly and cost effectively to manage our 180,000 employee workforce. 

Merging 22 agencies, also presents information technology challenges for our 21st 

century agency. Rationalizing disparate technologies with conflicting business rules, 

consolidating data centers and networks, getting the right information to border 

agents, preventing cyber attacks against our mission critical systems, or even having a common email system must be achieved to help detect and deter future terrorist attacks. 

The challenge facing the IT function of DHS is very complex. For example, to accomplish its dual mission of border security and trade facilitation, U.S. Customs and 

Border Protection (CBP) is modernizing its operational processes and the information technology that supports them. As an integral component of ‘‘Smart Borders,’’ 

the web-based Automated Commercial Environment (ACE) will provide CBP officers 

with the state-of-the-art tools and enhanced information they need to decide—before 

a container or other cargo reaches the border—what should be targeted because it 

is high risk, and what should be expedited because it complies with U.S. laws. The 

burden of paper-intensive manual processing of goods will be significantly reduced, 

facilitating the movement of commerce, and reducing costs for both government and 

the private sector. The ACE will provide a single, centralized, on-line access point 

to connect CBP and the trade community, enabling businesses and their CBP account managers to have a national account view of their trade activity. Through the 

creation of a shared data warehouse, ACE will enable border enforcement agencies 

access to a large volume of information, streamlined data collection, and a significantly enhanced capability to share and analyze information. The ACE will ultimately be delivered to all ports, locations, and transportation modes. 

Ultimately, there are three major areas of focus with regard to information technology within the Department. The first is to ensure that the men and women on 

the front lines of the Department have all the IT enabled solutions, tools, and training they need to safeguard the United States and to deliver the Department’s safety 

and service related missions. We must deliver new mission solutions with quality 

and speed, in a secure and cost-effective manner. 

The second area of challenge addresses the integration of existing IT enabled solutions. Guided by our Enterprise Architecture, the Department is identifying opportunities to consolidate and rationalize mission solutions. For example, in mission 

areas like threat identification and management, identity credentialing and collaboration, we have identified multiple solutions in use within the various organizational elements of the Department. The IT role is to facilitate the operators and subject matter experts in our agencies in determining the optimal number and nature 

of mission solutions needed. 

Finally, the third area of challenge is to realize efficiencies and economies of scale 

that the President and Congress desired by creating DHS. We must rapidly identify 

and eliminate overlap and redundancy within the IT infrastructure, as well as in 

key IT support programs including Information Security. At the same time, we must 
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ensure that we maintain mission operations while we restructure, integrate, and 

consolidate our IT infrastructure. 

In his proposal for creating the Department nearly two years ago, the President 

highlighted the use of enterprise architecture techniques to improve both the sharing and use of information. The President stated that the ‘‘development of a single 

enterprise architecture for the department would result in elimination of the suboptimized, duplicative, and poorly coordinated systems, and processes, that are prevalent in government today. There would be rational prioritization of projects necessary to fund homeland security missions based on an overall assessment of requirements rather than a tendency to fund all good ideas beneficial to a separate 

unit’s individual needs even if similar systems are already in place elsewhere.’’

The Department’s leadership has discussed the vision and strategy of DHS and 

how that strategy must fulfill the President’s vision; additionally, that vision must 

be supported by a disciplined capital planning and investment control process that 

is guided by business-driven enterprise architecture. Version 1 of the enterprise architecture describes a target information management infrastructure that will be 

dramatically different from the one DHS has today. One that will provide timely, 

accurate, useful and actionable information to all individuals who require it all the 

time. We believe this effort was truly unique in the federal government in that we 

delivered a comprehensive and immediately useful target enterprise architecture in 

less than four months. 

Version 1 of the Homeland Security Enterprise Architecture (HLS EA) defines the 

enterprise architecture at a conceptual level and outlines a general transition strategy that must be broken down further for the architecture to be implemented. 

Version 2 is currently on track for completion early in the 4th quarter, FY04. 

Along with continuing the hard work of developing greater detail, we will continue 

reaching deeper to find more opportunities for consolidation and opportunities to develop new and improved mission support capabilities enabled by information technology. Version 2 of the enterprise architecture, together with the associated transition plan, will serve as the basis for further improving DHS mission performance 

and facilitating IT alignment, integration, and consolidation. 

By creating the Department, the Congress took a great step toward bringing together many of the Federal agencies involved in homeland security—Customs, INS, 

FEMA, and others. We’ve put significant efforts into integrating these functions, 

both at the level of technology and at the level of operational processes. We’ve built 

and continue to optimize a single DHS wide-area network, and we’ve established a 

common e-mail domain and Department-wide collaboration capabilities. 

Under the direction of Secretary Ridge, the Department was tasked with the creation of an integrated information technology (IT) infrastructure that supports the 

missions of the Department and is accessible by federal, state and local law enforcement agencies. To carry out that activity, the DHS CIO, with representation from 

every major DHS directorate and key agency/bureau, established the goal of ‘‘One 

Network’’ by December 2004 and ‘‘One Infrastructure’’ by December 2005. 

The DHS IT Infrastructure Roadmap, completed in FY 2003, delineates the integration, consolidation, and transformation of existing DHS infrastructures into a 

single world-class IT infrastructure capable of supporting real-time information flow 

throughout DHS. The Roadmap focuses on centralizing development of standards 

and protocols, improving transportation of information, and streamlining processes 

and procedures, to achieve a centrally managed, homogeneous IT infrastructure 

with an integrated network, consolidated data centers, and standardized collaboration and desktop environments. 

Immediately after the Department’s formation last Spring, the key Federal agency 

partners laid the policy basis for information sharing in a Memorandum of Understanding that gives priority to preventing terrorism and mandates faster and broader exchange of law-enforcement and intelligence data. Additional MOUs and operating agreements implementing this policy have been developed around specific 

needs.

Watch List Consolidation, Interoperability, Information Sharing, & Infrastructure 

Protection 

In May, the President establish the Terrorist Threat Integration Center (TTIC), 

and DHS immediately assigned staff on site to coordinate information exchange, 

while technical staff have been working closely to establish secure communications 

for automated operations. 

Following issuance of HSPD–6, Secretary Ridge, Attorney General Ashcroft, Director of Central Intelligence Tenet and Secretary Powell established a framework 

for interagency cooperation to set up the Terrorist Screening Center for initial operations on December 1. DHS, FBI, and State Department staff have moved into this 
18

joint operations center, and have established the secure communications and systems to create a consolidated Watch List for use by all key agencies. At the same 

time, the agencies are planning for a 2004 milestone to further automate the distribution of these data by establishing direct system-to-system links, based on a 

common data format. 

Agreed standards for data exchange are a key enabler for integrated computer 

systems. DHS is leveraging work already under way in the Department of Justice 

through its GLOBAL Information Sharing Initiative and the Intelligence Community’s Metadata Working Group. Our goal is maximum use of common data formats 

so that Federal and local partners can build systems that will immediately interoperate with others, without expensive customization. 

In March, Secretary Ridge announced the initial deployment of the first component of the Homeland Security Information Network (HSIN). This component, based 

on software adapted from the Department of Defense, will provide secure communications between DHS and 100-plus sites in all 50 states and major cities. Additional capabilities will be added to the HSIN framework, which is designed to create 

a shared collaboration space among all Federal, State, and local entities partnering 

in the homeland-security mission. 

Whether fighting a fire or responding to a terrorist attack, efficient and effective 

emergency response requires coordination, communication, and the sharing of vital 

information and equipment among numerous public safety and security agencies. As 

the National Strategy for the Physical Protection of Critical Infrastructures and Key 

Assets makes clear, ‘‘systems supporting emergency response personnel, however, 

have been specifically developed and implemented with respect to the unique needs 

of each agency. Such specification complicates interoperability, thereby hindering 

the ability of various first responder organizations to communicate and coordinate 

resources during crisis situations.’’ 

In line with the needs of emergency response providers and the National Strategy 

cited above, DHS has developed intradepartmental program offices to address several key homeland security priorities. Accordingly, DHS is establishing a program 

office to significantly improve interoperability, allowing firefighters, police officers 

and other emergency personnel to communicate and share equipment with each 

other during a major disaster. The Directorate of Science and Technology (S&T) 

within DHS has been tasked to lead the planning and implementation of the Office 

of Interoperability and Compatibility (OIC) in coordination with other DHS programs. By coordinating and leveraging the vast efforts spread across the federal 

government, OIC will reduce unnecessary duplication in programs and spending, 

identify and promote best practices, and coordinate federal activities related to research and development, testing and evaluation, standards, technical assistance, 

training, and grant funding related to interoperability. 

In a related vein, the Department has announced the formation of a Federal Advisory Committee on Data Integrity, Privacy and Interoperability to advise the Secretary and the Chief Privacy on programmatic, policy, operational, administrative 

and technological issues within the Department that concern privacy, data integrity 

and data interoperability. This Advisory Committee will serve an important function 

to ensure that DHS decision-makers have available the expertise of leading authorities on these matters as policies concerning data sharing are developed and implemented. 

There has been a tremendous amount accomplished since this Department was 

created, and we are fully cognizant that much more work remains to be done. We 

must also focus on further refining ourselves and our identity both operationally 

and organizationally. Some of these steps to accomplish this objective have been laid 

out for you today. We look forward to continuing to work with the Committee and 

the Congress in furthering our national goal of ensuring the security of this great 

nation.

Chairman COX. Thank you very much, Admiral Loy. We are, of 

course, on both sides of the aisle very proud of the 180,000 plus 

people that work at the Department of Homeland Security. And as 

I mentioned and Mr. Turner mentioned and Ms. Dunn mentioned, 

the operational side of DHS couldn’t be more important and more 

noticed by us in Congress and by the country. 

The importance of the operational side and the analytical side of 

DHS is one of the reasons that your management challenges are 

so great, because at the same time that the Nation expects you to 

execute all of these functions and perform all of these analyses and 
19

undertake all of these activities, we also want you to consummate 

this merger. We also want you to build from scratch brand new 

pieces of this enormous cabinet department that didn’t exist before. 

I want to, just for flavor, put before you three quotations from 

different observers about the management challenges that DHS 

faces and ask you to react to them as scene setters. First, Professor 

Donald F. Kettle, who is a public administration expert, offers the 

observation that, quote, top officials have been able to devote relatively little time to the vast management problems of getting such 

a large operation up and running, because senior officials are so 

buried under the pressing day-to-day operational issues and have 

little energy and less time to devote to resolving management 

issues. 

Second, the General Accounting Office has observed that, ‘‘The 

challenges in integrating disparate organizational cultures and the 

major transformation that DHS is undergoing requires a strong 

Chief Operating Officer to elevate attention to and integrate management initiatives and institutionalize accountability for addressing them.’’

Third, ‘‘Most independent experts,’’ this is a quotation, ‘‘Most 

independent experts consistently find that successful change management initiatives can take from 5 to 7 years.’’

Given the challenges that DHS faces in merging 22 agencies, 

many with their own long-standing management challenges, the organizational transformation that you are trying to work, I would 

ask you to take into account some of these comments are critical, 

some mere observations, and tell us the following: First, how long 

do you believe it will take before the Department can achieve what 

you would consider to be full integration? And for that purpose, 

imagine your aspirational goal for what full integration could theoretically mean. 

Second, do you see yourself as filling the job description of the 

strong chief operating officer? And I don’t mean for you to have to 

evaluate your strengths and weaknesses but rather the box that 

you have on the chart. Is that job that you hold responsible for 

being the strong chief operating officer that GAO says that we 

need? 

Third, is there anything that we can do organizationally, that 

Congress can do to assist you in this respect so that this taffy pull 

that Professor Kettle mentions that you have got to do two things 

at once—you have got to run the place, and then you have got to 

tackle the management challenges—that it isn’t a distraction but 

rather we can do both simultaneously? 

One option, as you know, this committee is considering is transferring the components of the management directorate to the Office 

of the Deputy Secretary. TIOs, by way of example, and the Department of Transportation and Commerce are located in the Office of 

the Secretaries, elevating positions such as the CIO and the CFO 

would enable them to more easily and more efficiently guide Department-wide policy efforts. 

What are your thoughts? Do you agree that reform such as that 

might help enhance overall management of the Department? 

Admiral LOY. Thank you, Mr. Chairman. It is a very wide-ranging question. Let me see if I can take it in pieces. First of all, with 
20

respect to how long it will take, of course we all have as a reference 

point the last time we tried this kind of reorganization in the Federal government was about 1947, and it took us about 40 years, 

and that just got us to Goldwater–Nichols where we had an awful 

lot more work to do after that. So that standard is certainly something that we are not abiding by. 

I truly believe, sir, given where we have come from, and even 

some of the numerical references I tried to give you in my opening 

testimony where we started with 19 of these and are at 10 now on 

our way to 1; where we started with 22 of these and we are on 7 

now, on our way to 1. There is a bit of evidence there that suggests 

even in the face of sort of saying, ‘‘Well, we took the low-hanging 

fruit, the easy stuff early and the rest of the way to 1 is going to 

be very difficult,’’ that that functional integration effort, I believe, 

by the time this Department is celebrating its third birthday 

should largely have been accomplished. And the framework associated with it should in fact be in place, including largely the cultural buy-in, if you will, from the 22 disparate organizations that 

came together to form the new department. 

I think we at the top of the organization have to stress this DHS 

identity. The notion that it is a ‘‘one team-one fight’’ slogan, if you 

will, from Secretary Ridge is a very real rallying cry for many in 

the Department. 

And I also believe that it has an enormous amount to do with 

keeping the other leaders in the organization—the agency heads, 

the undersecretaries—on board with the direction that we are 

going. That is why all of those players were in the room when we 

went off to our off-site to develop the strategic plan. I was not interested in someone being able to say, ‘‘I didn’t have my opportunity to see where we were going and now I am not going there.’’ 

They were all in the room, believe me, and they all contributed, 

and what we ended up with, with our vision, mission and goal set, 

is a package deal bought into by every member of that leadership 

team. The ownership that we walked out of there with is a statement about everybody going in that direction. 

So I would think, sir, that at end of the third—when this organization is celebrating its third anniversary, we will have accomplished this framing integration effort functionally that we have set 

out to do. 

This notion of whether or not the Deputy Secretary is the right 

place to push that, I think without a doubt, sir, that it is. It is the 

only place that the entire Department comes together, and the 

committee’s expectation of what the COO ought to get done should 

rest with that position in the Department. 

To that end, I look forward to conversations and work with you 

on whether or not organizational elements such as you suggest 

with respect to the Undersecretary for Management would be better served in an adjusted position within the Department. At the 

moment, I feel absolutely no qualms in reaching to the Undersecretary for Management and as necessary to the CFO–CIO. I spent 

personally an awful lot of time with the CIO, with the CFO, with 

others at that level. 

We have arranged a meeting standard in the Department where 

the Secretary personally meets with all of the undersecretaries and 
21

his direct reports once a week. I attend that meeting and then have 

another meeting with a widened horizon that pulls all those players to the table, and I am able to hear literally on a weekly basis 

from every one of those places inside the Department. 

So how you go about the engagement process I think is absolutely crucial, and I think the right place you put the responsibility 

is in the Deputy Secretary’s chair. 

What can the Congress do to assist? You have offered at least an 

initial notion, sir, with your comment about the Undersecretary for 

Management. I suggested in my opening comments that there are 

a couple of places that we have come to recognize where if the 

threats to this Nation are really looked at carefully in terms of 

maybe a pie chart that has segments about the threat itself, the 

likelihood of the threat and the consequences of the threat, several 

things to me have literally jumped off the table with respect to the 

consequence piece. 

So I offered in my opening remarks at least a short inventory of 

things nuclear, of things biological and of things cyber that may actually be something that we want to focus our attention on organizationally as well as functionally. We have not made those judgments yet inside the Department, and I have not taken to the Secretary any recommendations in that regard, specifically, but those 

are several things, sir, that we are already talking about. 

Chairman COX. Thank you very much for your complete answer. 

I look forward to working with you on these aspects and challenges. 

The gentleman from Texas, Mr. Turner? 

Mr. TURNER. Thank you, Mr. Chairman. Thank you again, Admiral Loy. Now, sometime if I take a big picture view of what we are 

facing and the challenge we are trying to overcome, it strikes me 

sometimes that we have yet to really fully understand and comprehend the changed world that we live in. For decades, we all 

knew that protecting the national security was carried out primarily by the Department of Defense—the Army, the Navy, Air 

Force, the Marines. 

Admiral LOY. Coast Guard, sir. 

Mr. TURNER. Coast Guard. Absolutely, yes, sir. And in the post–

September 11 world, we were confronted with the fact that the 

enemy was one that we have not dealt with before and that this 

war against our terrorist enemies is not going to be won by simply 

toppling states that may be terrorist havens, because terrorists can 

find havens in many places in the world. And by our actions to 

merge 22 agencies, I think what we were really saying is that we 

now have 22 new agencies who must be dedicated to the same mission as the Department of Defense, and that is national security. 

And the Congress, to my knowledge, has never hesitated to fund 

whatever is necessary in the Department of Defense to protect our 

national security, but I am convinced that we have a long way to 

go in terms of fully carrying out the task of securing the necessary 

resources, necessary programmatic efforts necessary to protect the 

national security in this new environment. 

And I am pleased to hear your thinking, particularly along the 

lines of your personal efforts to try to think in terms of the threat, 
22

the likely threat and the consequences, because it clearly is the catastrophic event that we must fear the most. 

I hope you will take a look at a bill that I introduced Tuesday 

to try to move us forward in a more rapid pace in the area of bioterrorism to deal with the—. 

Admiral LOY. Certainly will, sir. 

Mr. TURNER. —piece of the picture that I think is being neglected. 

But when I think about the fact that a lot of those agencies, let’s 

say Customs and Border Patrol, for example, were engaged prior 

to the merger in a task that we all knew was important, that is 

protecting our borders against illegal immigration, and yet we 

know that there are estimates now that in spite of all those previous efforts, there are somewhere between, I am told, 7 to 12 million illegal immigrants in this country today. 

And so all of a sudden in the post–September 11 environment we 

have decided that there can’t be any because one of those illegals 

might be a terrorist. And so we are trying to reconstruct the agencies of government to ensure that what was previously just a law 

enforcement function that it didn’t work perfectly, we could all 

probably live with it without great danger, and so we ended up 

with 7 to 12 million illegal immigrants in this country. Now we 

have declared we can’t have any. And that is a major shift in the 

responsibility of government. 

I have had a lot of concerns about this issue of information sharing. I am sure the 9–11 Commission is going to be full of recommendations for us on how to solve the information sharing task, 

and you and I had a conversation in my office a few weeks ago 

about the need that I see and I think you share to develop a comprehensive intelligence information sharing system that can collect 

intelligence and share it among a wide variety of Federal agencies 

in real time so that when you are looking at someone who is crossing our border and you work for the Customs and Border Patrol 

agencies, you can say, ‘‘I can find out what my government knows 

now about this individual that is coming across the border.’’ And 

so that local law enforcement officials when stopping somebody 

who might be speeding and looks suspicious can find out in real 

time what all of our government agencies know. 

I have concerns that, even sitting on some of the classified briefings we have from time to time, that different agencies of government who brief us on threats are not even saying the same thing. 

So, if you will, address this issue that I know you have concern 

about. I think I suggested once that you look at what the Miracle 

Foundation software was to try to develop a comprehensive information sharing system. 

Are we working toward that end? Are we still working within the 

FBI and still working within DHS to improve IT and yet have we 

come to grips with this concept of total intelligence information 

sharing in real time and how we are going to have to go about getting that? 

Admiral LOY. Yes, sir, I am happy to comment on that. Just this 

last week I have been personally involved three or four hours a day 

in an eligible receiver exercise which puts at the table all the players in the Federal government with a scenario being played out. 
23

This particular one had to do with a ship coming towards the 

United States, and a lot of inputs to the exercise offered insight 

that there might be something on that ship that we were very concerned about. And then proceeded to a national capital region kind 

of scenario where in fact there was already a device somewhere in 

the United States, and more and more evidence became focused on 

the capital region. 

I only use that as a forum to offer for you that the sharing process you were describing, such that whether the agency found it out 

or whether the Bureau found it out or whether some longshoreman 

on the port in Norfolk observed it and made it an observation to 

whomever and passed it up the line, through the course of this exercise this week I felt better than I have ever felt with respect to 

all players seeing all information and being able to make judgments toward their responsibilities attendant to that. 

I would extend your concerns, because I know you have them, 

sir, as you expressed them, about the sharing process among Federal agencies to include the down-the-line—that horizontal sharing 

is very, very important, and I think the establishment of TTIC and 

the TSC are concrete steps along the path toward where we want 

to be in that regard. 

Now, are they permanent steps or not? I think that is a judgment to be taken down the road when TSC, for example, who is 

in the process of developing the integrated watch list has accomplished its purpose, although it is a dynamic one with people coming and going on to that list every day. Once that purpose has been 

accomplished, is that the final organizational placement, a freestanding agency for our terrorist watch list? I think that is to be 

determined down the road. 

But the TTIC organization, which absorbs all source intelligence, 

foreign and domestic, to grapple and have at their analytical table, 

if you will, the means to think through the bigger picture, that 

process seems to be working very, very well. John Brennan, I believe, is doing one of the most positive jobs that is being done in 

our Federal government as the Director of TTIC. 

I was just in New Hampshire last week, sir, Kentucky the week 

before, announcing the establishment of the Homeland Security 

Department’s piece of that action, which is to take the products of 

an all-source intelligence activity and read them through the lenses 

of the homeland security glass and then share them vertically 

down through State and local activities to get to the other end. 

This little chart is just a little depiction of the homeland security 

information network that we delivered and activated in New 

Hampshire and in Kentucky just last week, which will be at 50 

State and 6 territories and 50 of our largest urban centers to the 

point where that traffic police officer will have at his disposal realtime information about who he might be dealing with as he pulls 

over someone for a speeding violation. 

So we are well on the way to accomplishing your vision, I think, 

Mr. Turner. Lots of work still to be done and the edges and the 

marginal adjustments to those things to make sure they are right, 

but I think your vision is no different than that of all of us who 

are working so hard to make it happen on the job. 
24

Chairman COX. Gentlelady from Washington, Ms. Dunn, is recognized for 8 minutes. 

Ms. DUNN. Thank you, Mr. Chairman. Thank you. I have a couple of questions, Admiral. According to a study by a leading consulting firm, most corporate majors fail to deliver results that meet 

expectations. The study found that the failures were most often attributable not to flawed vision but to poor integration. This is obviously not your average two-party merger. We are dealing with 22 

distinct organizations with distinct cultures. What are the control 

mechanisms that you as a manager of this project are focusing on, 

number one? And given the reality of the political climate and the 

pressure to get things done as quickly as we can, with your priority 

list constantly changing, how do you decide what is or is not a realistic expectation? 

Admiral LOY. It is a great question and one that we pour over 

daily in the Department, Ms. Dunn. I think I would answer it this 

way: The Secretary, by way of the strategic plan with respect to 

functional excellence in five action goals and two service goals, if 

you will, has challenged each and every member of the Department 

to rise to the occasion and be part of the new way of doing business 

in government. That last goal, called organizational excellence is 

all about forging a 21st century cabinet-level agency, not being 

bound by the baggage, if you will, or even the legacy sometimes 

enormously proud of may of those agencies that came together with 

us on March 1 last year. 

We have forged over the course of this year not only those evens 

strategic goals but then these theme areas which the secretary has 

now sort of pulled into a core of absolute that we believe are the 

crucial keys to the functional integration of the Department at the 

other end of the day. 

So 3 years from now, as I indicated to the chairman, when we 

wake up on that March the 1st, if we have played our cards right, 

if we have led and managed well, if we have delegated well to people who perfectly are able to the job done that we asked them to 

get done, as long as we are clear and provide them the resources 

to do it, I think we will be where we want to be in these seven core 

theme areas. So that is about the things that make a difference as 

to whether our homeland will be secure. 

It is about better critical infrastructure protection, it is about 

better information sharing, to go back to Mr. Turner’s point, it is 

about better interoperability. God knows if we learned a single lesson from the horrors of September 11 in New York it was that the 

firemen could not talk to the police officers, who couldn’t talk to the 

EMTs, who couldn’t talk to their base. That is totally unacceptable. 

So when the interoperability theme was provided and a rose was 

pinned on one senior leader in the Department to be responsible 

for that, his responsibility is not to live within his little cell and 

make it happen. His responsibility is to reach wherever he needs 

to reach to pull together the wherewithal to make that happen. 

I am personally monitoring those things month after month after 

month, looking at the milestones and the individuals responsible 

for that work, and it is that commitment, if you will, I believe, that 

will make a difference to allow this merger, which you properly de-
25

scribe as enormously challenging, to succeed at the other end of the 

day. 

I mean it is trite to say failure is not an option and such things 

as that. It is far more fundamental to have in place the mechanics 

necessary to take us from where we are to where we want to be. 

Ms. DUNN. Very interesting. Thank you. You actually answered 

my second question, so let me put to you another one. I appreciated 

your detailed description about the progress the Department is 

making in consolidating the functions of the systems and so forth. 

And so let’s talk for a minute about program consolidation. It 

seems to me that one of the critical benefits gained from consolidating all those agencies is that all components would be able to 

take advantage one mission-centered R&D program. What is your 

response to that observation? And how are we making sure that 

R&D efforts are also being coordinated Department-wide? 

Admiral LOY. Two things. First of all, you are absolutely right on 

point with a very important part of what we are trying to do. The 

science and technology directorate, under Dr. McQueary’s direction, 

is responsible for this particular one. And his outreach with respect 

to functionally integrating the R&D efforts as well as other science 

and technology applications for the Department is where we hold 

him responsible over time. 

There is probably—some might see it as a complication, I don’t 

perhaps necessarily do—but in the law that created the Department, there is at least two organizations, the Coast Guard and the 

Secret Service, that have been decreed in the law to ‘‘stay in tact,’’ 

quote, unquote, as they came into the Department, for very good 

reasons. But what I imagine, for example, with respect to the R&D 

process is a several-fold approach. One, what do we do with laboratories inside the Department and laboratories that are outside the 

Department but actually can bear on what we are doing in DHS? 

The integration of those efforts functionally are a fundamental absolute for Dr. McQueary to have some degree of control over what 

is going on there. 

The second thing is about customer requirements. Dr. McQueary 

should not sit in his cubicle and imagine what are the right R&D 

programs to be defined for the Department of Homeland Security, 

he must be aggressively accepting and challenging his customers, 

including the other directorate chiefs and undersecretaries in the 

Department to define for him the things that will make their work 

better. 

For example, having spent a couple of years at the Transportation Security Administration, I can tell you that our goal there 

is in the longer-term to get away from heavily people-dependent 

technologies at our airports and on the way toward some smaller, 

faster, better box that will be the enabling device 3, 4, 5 years from 

now to replace lots and lots of people with a capable piece of technology that can do the security job that we want done at the airport. 

So I would offer that that is not where Dr. McQueary would logically wake up in the morning, but I can tell you Dave Stone wakes 

up in the morning thinking about that, so Dr. McQueary’s review 

of customer requirements has to be a complete one. And when that 

is complete, then the Secretary can help Dr. McQueary define pri-
26

orities in terms of what his budget allows him to get on with. But 

in that scheme, he is serving a customer base that is, as the Department, representative of R&D needs across the Nation. 

Chairman COX. The gentlelady’s time has expired. The gentleman from New Jersey, Mr. Andrews is recognized for 8 minutes. 

Mr. ANDREWS. Thank you, Mr. Chairman. Thank you, Admiral, 

for your testimony and more importantly for your service to the 

country. It is very much appreciated. 

Admiral LOY. Thank you, sir. 

Mr. ANDREWS. This morning, if a person who was on the CIA 

watch list tried to board an airplane, would the TSA know that in 

real time? Would the know the person who tried to get on the airplane is on the CIA watch list? 

Admiral LOY. To the degree the—you are referring—we have two 

lists, sir, that are in use, if you will, at the airports, and they are 

actually used by the airlines as well as TSA for the moment. That 

is what the CAPP system is all about at the moment. And the 

means by which we offer insight to the no-fly list and the selectee 

list offers guidance as to whether or not that person gets on the 

airplane at all, no-fly list, or whether he gets on the airplane with 

secondary screening if he is on the selectee list. 

Mr. ANDREWS. Is there anybody who is on the CIA watch list 

who is not on these two lists that the TSA has? 

Admiral LOY. Sir, I am not sure what you are referring to as the 

CIA watch list. The CIA makes a contribution to these two defined 

lists that are if not real time certainly within a 24-hour window updated daily. 

Mr. ANDREWS. Isn’t there supposed to be one list? Isn’t that what 

an integrated watch list is? 

Admiral LOY. Actually, it is the Terrorist Screening Center that 

is developing an integrated single watch list for all of us to use 

across the Nation, and when that product is complete, that is precisely the list that we will be using, sir. 

Mr. ANDREWS. Okay. So it is at least logically possible that the 

CIA has a list of people that they are watching because they are 

worried about them and that some of the people who are on that 

CIA list are not on the same list that we are using to keep people 

off of airplanes. Is that right? 

Admiral LOY. It is conceivable, but in my practice, sir, the CIA, 

the Bureau and others who can make a contribution to either of 

those lists I just described, one is associated—the no-fly list are 

those terrorists that have been deemed so or those who associate 

with terrorists, and the selectee list is just a lesser level of concern 

but offers us a chance to not just pass them through primary 

screening but require that they go through secondary screening. 

Mr. ANDREWS. But we are still relying upon someone at CIA or 

FBI to insert that information on the list that TSA is using, correct? 

Admiral LOY. That is correct, sir. 

Mr. ANDREWS. So if TSA doesn’t ask or CIA or FBI don’t offer 

the information, it doesn’t wind up on the list, doesn’t wind up on 

the list that keeps people off an airplane. 

Admiral LOY. That would be correct. My experience has been 

they do project those names forward and we put them on the list. 
27

Mr. ANDREWS. Okay. Isn’t that why we wanted an integrated 

watch list, so we wouldn’t have any possibility of someone getting 

to it 48 hours late or forgetting to ask? Isn’t that why we wanted 

it? 

Admiral LOY. One of many reasons, but, yes. 

Mr. ANDREWS. Okay. Why don’t we have one? We are two and 

a half years after September 11. I mean I know almost nothing 

about running an intelligence operation, and I know even less 

about software, but what is the big deal about taking a list that 

the CIA and the FBI had, merging it into one secure, well vetted, 

limited access database that everybody uses? Why haven’t we done 

this in 30 months? 

Admiral LOY. That particular chore was assigned and is precisely 

the reason that the President chose not to wait for a maturing 

process of a new department to come into vogue but rather establish the TSC to stand up and do that job. That is exactly what they 

are doing. 

Mr. ANDREWS. But the job isn’t done yet. The TSC hasn’t done 

it. Is there something more complicated here than saying everybody who is going to make a contribution to a list that people have 

got to worry about has got to put them all in the same list and 

same database? Is it more complicated than that? 

Admiral LOY. It is a very complicated system, sir, but I am not 

the one responsible for that at the moment. I would be happy to 

find out from the Director of the TSC and get back to you. 

Mr. ANDREWS. Well, you know, we are here talking about management issues, and, boy, if this isn’t a management issue, I don’t 

know what is. And this is not a rhetorical question. There may be 

something far more complex about how to do this than what I just 

said, and if there is, I welcome to hear it, but I haven’t heard it 

yet, and I just don’t understand why all of the intelligence sources 

that are out there working on these problems, they are not contributing to a common database that has very secure access, very limited use by very trustworthy people. 

I just don’t get this, and we have had various people from the 

Department before the committee over about an 18-month period 

now giving us deadlines that don’t get met and procedures that 

don’t seem to come about. I appreciate the fact that you will get 

us an answer from someone who is supposed to be doing the answer, but we have had that before, and I just don’t understand 

this. 

And I will tell you something: The number one job of the Department is not simply to make us safer, it is to build confidence in the 

public that we are in fact safer. And this is not a confidence-building measure here, and I understand that you have been given—you 

and your colleagues have been given probably the most difficult organizational merger in the modern history of the United States, 

public or private sector, and if the issue here were that the health 

benefits weren’t uniform among different agencies, I am sympathetic to that but I understand. 

Admiral LOY. Yes, sir. 

Mr. ANDREWS. If the issue were that you have got stovepipe computer systems that can’t necessarily share data in an efficient way, 

I understand. If the issue were that you haven’t worked out the 
28

encryption technology so that you can carefully limit such a secure 

database as the integrated watch list, I would understand. What I 

do not understand is that we are here 2 years later and we still 

don’t have this in place. I mean can you tell us when we will? I 

mean I know it is not your specific responsibility, but when is this 

going to happen? 

Admiral LOY. I think the goal is to have it done very soon, sir. 

I don’t have the dates in my mind as to what the TSC Director is 

obligated to accomplish, but I know she is on track, and I will be 

happy to talk with her today and ask her to get back to you on the 

specifics of her responsibility. 

Mr. ANDREWS. I appreciate that, and not just me, but the committee. 

Admiral LOY. Sure. 

Mr. ANDREWS. I know that Mr. Turner has worked on this issue, 

Mr. Cox has worked on this issue, a lot of people have, and I do 

not mean this as any way an attack on the administration. It is 

a question that I think needs to be answered. And if I have missed 

some technical explanation, please tell me, but I think everybody 

at the Department is responsible for this. 

I think you very succinctly said that the goal of the Department 

is to deter and then prevent, if possible, attacks on the homeland. 

That is the best I have heard it said. But you can’t deter and prevent if you don’t know who it is you are trying to guard against. 

And if we have viable operational intelligence about who it is we 

are going to guard against and it is not shared among all the agencies that have that function responsibility, then we have a huge 

problem. 

Final thing I want to say this: Interoperability, there is not a 

person who follows this issue that doesn’t understand that this 

tower babble problem is a big deal. The amount of money the administration put in the budget for interoperability this year is 

zero—zero. Now, I am not in favor of spending a whole lot of money 

until we figure out how to fix the problem, but part of figuring out 

how to fix the problem must include calling together the experts in 

this field to design a system that works. Why did you propose nothing in the fiscal year budget for interoperability if it is a problem? 

Admiral LOY. Well, there is an awful lot of money in the budget 

in a variety of different programs that we feel do need to be 

brought together to provide this interoperability solution that we 

are all looking for, whether it is an interim or temporary patch 

process of which there are very, very good products out there to 

help us do that or whether it is the design of an entirely new system that over time we need to go to. 

In many of those places where there is a system that is serving 

the police officers and a separate one serving the firemen and a 

separate one serving EMTs or whatever, the dollars associated 

with those programs are what we find a means by which we can 

integrate the wherewithal from the combined budgets of those separate systems as disparate systems. That is what I think functional 

integration is all about. 

Mr. ANDREWS. Well, and I see my time is up. I would say with 

all due respect that paying for solving interoperability problems by 

depleting other resources is not the way to do this. 
29

Admiral LOY. Well, I was not suggesting we would deplete 

sources, sir. I would suggest we would use those resources in a 

smarter way than they have been used disparately to this point. 

Mr. ANDREWS. It isn’t very smart if the money comes from training or biochem suits for first responders, and I don’t know what 

else is in the budget that it would come from. So thank you very 

much, Admiral, I appreciate it. 

Chairman COX. The Chair would note with to the gentleman’s 

questions about the Terrorist Screening Center that the committee 

just had a hearing on this subject a few weeks ago. The committee 

is very, very concerned with this. I would also note that the question whether the Terrorist Screening Center should come under the 

responsibility of the Department of Homeland Security is a very 

good one. It is one that the committee is interested in, but the gentleman is well aware that it is not the responsibility presently of 

the Department of Homeland Security, it is the responsibility of the 

Department of Justice and the FBI. I hope we will continue to do 

this question. 

Mr. ANDREWS. Will the chairman yield just for a moment? I do 

note, and I did say, that I think the committee has been very diligent in pursuing this issue. I hope that diligence continues, because we should not let some jurisdictional barrier get in the way 

of getting an answer to this question. 

Chairman COX. The gentleman’s point is well taken. The gentleman from Texas, Mr. Sessions, is recognized for 8 minutes. 

Mr. SESSIONS. I thank the chairman. Admiral Loy, welcome—. 

Admiral LOY. Morning, sir. 

Mr. SESSIONS. —to this subcommittee. We, as you have heard, 

place great value upon your competency and your capacity to serve 

this great Nation in homeland security. 

I would first like to start by saying that I had an opportunity 

several weeks ago to be with your Air and Marine Interdiction and 

Operations Unit in San Angelo, Texas and Corpus Christi under 

the direction of Colonel Charles Stallworth who is doing a fabulous 

job. The men and women who I came into contact with are very 

proud not only of the Department and the achievements that have 

been made but also of their job and the ability that they have to 

perform that duty. And I think that speaks well of many other 

things which the Department is doing well and hopefully will continue to do. 

I also, sir, have had an opportunity over the last couple weeks 

to talk to Judge Bonner and Mike Garcia who worked for one of 

our former colleagues, Asa Hutchinson, who I think is doing a fabulous job also. The nature of the questions that I would like to have 

you address are specifically two. 

One about the aerostats, which are these balloons, tethered balloons, which are along our Southwest border. They were transferred to the Department of Defense. The Department of Defense 

over the last few years has had a change of focus for them, taking 

from necessarily those functions that they were doing to war, and 

I believe that there has not been a proper focus put on the proper 

manning, funding and utilization of those aerostats. 

Secondly, the question I have deals with essentially legal immigration into this country with a visa. And it is my hope that there 
30

would be some discussion, and I am interested in hearing from you 

today, about those avenues which where people come in. There are 

about 130,000 of them that stay. I have had direct conversations, 

as I alluded to, With Judge Bonner and Mike Garcia about a willingness of this Nation to understand about everybody that comes 

here, everybody that does not leave, a process. 

Once again, we are dealing with legal people, but they have come 

to this country and said that they would come here under the provisions that we said and they should leave under the provisions 

that we have laid out. And I believe that it is in the best interest 

for us to have a legal framework that it is very difficult for us if 

we do not follow our laws and to insist that our laws be well understood. 

And so I am interested in a discussion about aerostats, and if you 

tell me you don’t know a lot about it, I can understand that. I 

would like to ask that you follow up. And, secondly, about the discussions that are taking place over the some 130,000 people that 

violate our laws and the things that I believe need to be done, 

could realistically be done in that endeavor. And I appreciate the 

gentleman’s response. 

Admiral LOY. Yes, sir. Thank you. With respect to aerostats, I go 

back a long way with aerostats in the counterdrug efforts of my 

time in the Coast Guard and working diligently with the Border 

Patrol, with the then legacy Customs Service and INS as well as 

DEA and all the other players that were involved in that process 

and recognize the value of what the aerostat offers in terms of border value, sensor value, eyes in the sky, if you will, at the other 

end of the day. 

I think there probably was waning of interest in terms of what 

was actually associated with the aerostats along the Southwest 

border of the United States, which I assume, sir, that is the ones 

you are talking about, because we have got them elsewhere as well. 

And their contribution, which was largely hinged in the tail end of 

10 years ago to the drug trade and what we were trying to do on 

the counternarcotics effort, that probably did wane in terms of 

focus and interest. Certainly, in terms of the DOD’s responsibilities 

that are so widespread at this point would continue, I would think, 

to have them less focused on the maintenance and the manning 

and the staffing and the support to them at this particular point 

in time. 

But what I can tell you is since September 11 there has been a 

dramatic resurgence of interest in border control writ large, whether it is up to 1,000 Border Patrol agents on the Canadian border 

where we used to have fewer than 400, whether it is the R&D, to 

go back to Ms. Dunn’s question about focusing on UAVs as a different way of dealing with sensors over our borders, maritime or 

land borders with Mexico or Canada. 

So the notion of whether or not aerostats play dramatically into 

our concern level about border issues is, I would think, on the rise 

and rising. And so we would be remiss, I would think, to set aside 

the use of the aerostats for the moment until there is a better 

mousetrap in place, so to speak, to take the place of what they are 

providing us in the way of censoring capability. 
31

So I am an old fan of them and a current fan of them until we 

get something better in place that would serve the purpose that 

they serve for us as a piece of the bigger picture of border control. 

Mr. SESSIONS. It would be my hope with respect to this, if I 

could, Admiral, to pass along that I will in a letter to you about 

perhaps the information which I had received about those activities 

related to the utilization of that. And I will be pleased to do that 

and would appreciate a response back. And you can give it to me. 

It does not have to be to the committee. 

Admiral LOY. Honored to do so, sir. 

Mr. SESSIONS. So that I can deal with it on an issue basis where 

I receive factual information and perhaps just not heresy. 

Admiral LOY. Sure. You bring up the issue with respect to migrants, and I would say there are three things that are very important for us to hold on to, because that is a very complex question. 

First of all, visa policy for the United States of America. We inherited the responsibility for visa policy from other executive branch 

agencies as it came in our direction. The Secretary has asked Undersecretary Hutchinson to take on the challenge in very quick 

fashion of examining the visa policy of the United States of America, together with the State Department and all the other players, 

and get back to him in very short order—I believe there is a scheduled briefing for the Secretary next week—as to the overview, if 

you will, of visa policy in our country. 

Second point is about portal control, if you will, and we as a Department are now responsible for that. I can suggest, as many of 

you know, that legacy INS was unable over the course of the last 

20 years to develop an adequate entry-exit system for the United 

States of America. In the course of 7 months we stood up US–

VISIT where millions of people have now come and gone through 

that particular system and effected, if you will, a control of the borders at the portals of entry to our country. 

We have now in 114 airports, 15 different seaports, we will have 

US–VISIT at the 50 busiest land border crossings of our country 

by the end of this year and at all of them by the end of next year. 

All of that is associated with the ongoing work with our international colleagues in terms of standard setting about passports 

and all the affiliated things that are connected to that. 

So border and portal control, a function now the responsibility of 

our Department, we have made, we believe, dramatic steps forward 

in establishing the end game with respect to that. 

And then, lastly, with respect to the naturalization process itself, 

many of those folks you are describing may very well be coming to 

our country with every intention of becoming honorable Americans 

at the other end of the day. Today, a system we inherited, by the 

way, is a broken system with 8-or 9-year waits for that process to 

run its course. The President has very clearly said, ‘‘Make that no 

longer than 18 months,’’ and we are in the business of establishing 

clear pilot programs that will prove to us the means by which we 

will get that backlog reduced to where it should be in a reasonable 

system, as the President has directed us to do. 

So it is a complex question, sir, that you ask. I believe we have—

our intentions are honorable and in the right direction with respect 
32

to those three aspects of it, and I hope in there somewhere was the 

answer to what you are concerned about. 

Mr. SESSIONS. I thank the gentleman. In fact, I believe that there 

should be some very specific things that this administration would 

come into contact with that, and my point would be is that we live 

in a legal framework of this country, and if we do not enforce the 

laws of this country, we allow other people to come and take advantage of that, and they become criminals. It would be my hope 

that there would be an immediate response that we would know 

who was nearing the end of their term, that they would be expected to leave and that we would not allow anything other than 

that and would take them on an expedited basis, perhaps for legal. 

I will follow up with a letter to you and would expect a response 

accordingly. And I thank the gentleman and thank the chairman. 

Chairman COX. The gentleman’s time has expired. The gentleman from California, a member on the Subcommittee on 

Cybersecurity, Science and Research and Development, Ms. 

Lofgren is recognized for 8 minutes. 

Ms. LOFGREN. Thank you, Mr. Chairman, and thank you, Admiral Loy. There are many things I would like to ask you about, and 

I am not sure there will be time to ask them all, but I do want 

to focus in on the Cybersecurity Subcommittee. 

Over the past year and a half, members of this subcommittee 

have spent a lot of time looking at what I think are sometimes very 

complex issues involved in securing the Nation’s critical 

cyberinfrastructure. And as we have done that, we have looked at 

the Department’s commitment to pursuing a sound strategy on 

cybersecurity, and I think members of the subcommittee have serious concerns about our accomplishments in that area. 

We are concerned that we are not doing an adequate job, in all 

honesty, and recently—well, the concerns really lie with whether 

we are sufficiently implementing the national strategy to secure 

cyberspace, whether staffing is adequate—I think that was mentioned earlier—not only in terms of the actual number of staff but 

the number of temporary employees, the turnover and also the 

placement of the division sort of buried down in the bowels of the 

bureaucracy and whether it is getting the attention that we need, 

and, furthermore, concerns about channels of communication between that division and the top levels of the Department. 

And in fact last week Chairman Cox, Ranking Member Turner, 

Chairman Thornberry and myself sent a letter to Secretary Ridge 

regarding the cybersecurity mission at the Department. Have you 

seen this letter? Are you aware of the letter? 

Admiral LOY. Yes, ma’am. We have gotten your letter. 

Ms. LOFGREN. And we have asked, the four of us, for a response 

by Monday, May 10. Do you think the Department will be able to 

meet this deadline that we have asked them to meet? 

Admiral LOY. I certainly—it is now very much clear in my mind 

that that was the deadline that you are asking for, Ms. Lofgren. 

We will try very hard to do that, and I will take that back as I go 

back today. 

Ms. LOFGREN. Okay. Thank you very much, and I would just—

I hate to be a nag but I also wanted to raise an issue because it 

has happened repeatedly that we have asked Mr. Liscouski and 
33

others to follow up with questions that we have not had answers 

to at the Department, and we just don’t get answers. It is like the 

questions go in, it is a black hole, months go by, we never get answers. And I am wondering in your management capacity if you 

could check and see what is the problem there on getting answers 

back to the committee. 

And also, again, we take our oversight commitment very seriously, and I am proud to say that the Cybersecurity and Science 

Subcommittee has operated in a very bipartisan manner. We not 

only have Chairman Thornberry work as a team but our staffs 

have worked as a team. We see this as not a party mission but an 

American mission. 

We never get testimony in a timely manner from people within 

the division. The rules are that it be 48 hours in advance. Sometimes we get it an hour before the hearings begin. That is really 

not—it is happening over and over again, even after we complain. 

And it does not give the committee time to fulfill its obligations of 

oversight. So I would like you also, if you would, please, to find out 

what is the problem there so that we can get that corrected. 

I would also like to talk just a little bit, it is not in the 

Cybersecurity Subcommittee, but about the Immigration Service, 

former Immigration Service, and that function. I also serve on the 

Immigration Subcommittee in the Judiciary Committee, and that 

whole function has been troubled for many years, as you have acknowledged, but I am fearful that we are not making the progress 

that we should make, in all honesty. 

The President has indicated he wants the backlog to be decreased. In fact, the backlog is growing. It is not shrinking, it is 

growing, and the time for processing is growing. And that, actually, 

although sometimes it may seem that it is not a security issue, I 

mean these are petitions of American citizens for their husbands 

or wives or adoptions, it is a whole mish-mash, but the fact that 

it is not—that our processes are not computerized sufficiently does 

I think pose a threat to the United States. 

In September of 2003, the GAO did a report and pointed out that 

in order to get information about financial information, that the 

INS would have to go and do hand counts to get—that is on page 

4 of the GAO report—hand counts to answer the questions. Well, 

what that tells us is that it is on paper. I mean they can’t actually 

get a computerized report. In January of that same year, the GAO 

again pointed out that the application workload has to be corrected, 

that the visa operations needed attention and that its weakness in 

technology management that is very much a problem. 

Now, you mentioned US–VISIT, and I think that is a very good 

start, but I want to bring some concerns to your attention, because 

I think we are sewing some problems for down the road. Two years 

ago I asked NIST what it would cost for them to set a biometric 

standard that could be utilized, and they said it wasn’t a funded 

activity but that for about $2 million, they had the lab capacity, 

they could provide the biometric standard. Well, that never happened. They were never funded. DHS had funds but they never actually provided the funds to NIST. And as of this moment, those 

biometric standards have not actually been developed nor adopted. 
34

Consequently, we are now engaging in an effort that is going to 

lead to a multiplicity of biometric standards that may or may not 

be suitable for a common database. For example, US–VISIT is 

using two index figures. However, the international biometrics that 

are pursuing with machine-readable passports is going to be facial 

recognition. The two are not going to provide a common database. 

Furthermore, it is not necessarily going to be compatible with the 

watch list. 

And what we need, and I think the sooner we do this the better, 

is that we need to have some common standard or a multiplicity 

of standards. There is no reason why we can’t have more than one 

biometric, but we need to have some standardization or else we will 

end up in 2 or 3 years with a system-wide problem that is similar 

to what we had with the INS. 

I would also urge, and I may actually even offer as amendments 

to our authorization, that we insist that the INS do something—

I keep calling them the INS out of habit—. 

Admiral LOY. No problem. 

Ms. LOFGREN. —that they computerize—I mean we can track our 

Fed Ex package online, but you cannot find out where your application is for your spouse if you are an American citizen with repeated 

askings over 2 or 3 years. They are filing by name and a number 

still, but they ought to be filing matters by biometrics, because you 

can have duplication of names but you cannot have duplication of 

biometrics. And it ought to be the same biometrics that is being 

utilized by our national security agencies, by the FBI, by the State 

Department. All of these things are highly doable. It is just a matter of management and making them happen. 

And so I don’t know you, but you have a reputation as a manager. I am asking you, really pleading with you, to exert some management control in this area and to make it happen, because I 

think until we—and we can integrate these legacy systems. I mean 

we can get off the shelf actually to integrate these legacy systems, 

which is why I say this is a management issue, it is not a technology issue, and I hope that you will, next time I see you, be able 

to tell me that we have solved these problems, and I look forward 

to the answers to our question on Monday. 

Admiral LOY. Thank you. 

Ms. LOFGREN. Thank you very much. 

Admiral LOY. May I just for a moment, sir? Thanks, Ms. Lofgren. 

Very, very excellent questions and issues across the board, as you 

described. Just a moment on several of them. First, with respect 

to cyber, both the Secretary and I have recognized that we have 

perhaps not found organizationally the right focus that cyber deserves, if you will, and I think of SCADAs and so many other systems that are so dependent there that it is one of those things that 

as I think about consequences it sort of jumps off the chart as does 

nuclear, like does bio and other such things. So we are thinking 

very, very along the same lines, if you will. 

I had a meeting 2 weeks ago where I called together folks from 

industry, folks from—observers that could help us help the chairman, if you will, of our NCSD, our National Cybersecurity Division 

inside IAIP. There is a great book called, ‘‘Black Ice,’’ that if you 

haven’t read it is what prompted me to have this meeting because 
35

it sort of was a confirming scare tactic almost. We are taking cyber 

very, very seriously, and over the course of the next weeks we will 

be going in the directions that are you describing as needed. 

I apologize, ma’am, for the responsiveness commentary that you 

are describing, and I promise you that I will go back, find this letter, see if it is possible to answer on Monday and if not, call you 

and let you know that’s to be the case. 

On CIS issues, again, this is something the Department inherited. As you keep using the phrase INS, I keep saying they are not 

there anymore. We have really broken INS into three pieces, and 

the ICE piece is working very well. The pieces that found their way 

into CBP are working very well. The piece that continues to offer 

services to the immigrant population is where the managerial concentration needs to be to press on. So that is where I am going. 

Ms. LOFGREN. If I may, I know my time is expired. The three divisions cannot work well unless they all work well. For example, 

the terrorists that came in through—and that helped destroy the 

towers—should never have been admitted, because they had applied for a change in status to a student visa off their visitors visa. 

Had that been computerized instead of on a piece of microfiche sitting in a box, the officer at entry would have denied them entry. 

Admiral LOY. You are right. 

Ms. LOFGREN. And I don’t fault the officer. He didn’t have the 

data. And so you can’t do the job unless it is all working together. 

Admiral LOY. All those challenges are very real. The IT end of 

CIS is something we are working on hard. We have just hired a 

new CIO to help them in that process of sorting out what they need 

to do, and integrating that, as both the chairman and Mr. Turner 

have indicated, into the bigger picture of IT integration Department-wide is part of our challenge. 

Chairman COX. The gentlelady’s time has expired. The gentleman from Arizona, the chairman of the Subcommittee on Emergency Preparedness and Response, Mr. Shadegg, is recognized for 

5 minutes. 

Mr. SHADEGG. Thank you, Mr. Chairman. First, let me thank my 

colleague, Mr. Shays, for deferring to me. I need to be elsewhere, 

and so he agreed to let me go first and I appreciate that. 

Admiral I want to thank you for being here, I want to thank you 

for your testimony. I frequently say both here and at home that 

you and the Secretary have I think the second and third toughest 

jobs in Washington, D.C. I give the President the toughest job. But 

I, quite frankly, think standing up a new department is phenomenally difficult, trying to bring together the agencies you have to 

bring together. Get them working together in a concerted fashion 

is very difficult. I appreciate your bringing to that task the expertise and the knowledge and the dedication that you have. I appreciate your work in the war on drugs in the past where I think our 

paths first crossed. 

I also want thank you for the Arizona Border Control Initiative. 

It has made a huge difference—. 

Admiral LOY. Sure has. 

Mr. SHADEGG. —it has been a tremendous success, and I appreciate it very much. 
36

I really wanted to discuss two specific kind of discreet issues. 

The first is the whole issue of the EP&R Division. I have a concern 

that the EP&R Division, Emergency Preparedness and Response 

Division, brought to the task the mentality of FEMA, which is a 

reactive mentality to an emergency or a disaster which cannot be 

prevented and therefore must be simply reacted to. And I have had 

conversations on the topic of this with people at the directorate 

who kind of look at it and say, ‘‘’Well, all emergencies are the 

same. If it is a forest fire or a flood or a hurricane, we have to go 

in and do our cleanup job.’’

And I see Department of Homeland Security as different than 

that. Indeed, I think the chairman and I have a very strong belief 

that this Department is about preventing attacks, not necessarily 

getting good at scooping up victims of an attack. I noticed that the 

emergency management grants, the fire grants and the homeland 

security grants are now being administered by the Office of State 

and Local Grant Coordination. 

I guess my question of you—my first question of you before I 

switch to a different topic is do you still believe the Emergency Preparedness and Response Division should be focused on all hazards, 

and if so, is it appropriately within the Department of Homeland 

Security or should it be somewhere else? And should the function 

of preparedness for a terrorist attack, which I think is a different 

mindset because you can stop a terrorist attack, should that be 

what remains within DHS? 

Admiral LOY. Sir, as you well know, the President has just 

signed HSPD–8, which is about preparedness in general. Interestingly, the word, ‘‘preparedness,’’ was a large part of that off-site 

conversation I mentioned with the leadership cadre of the Department. 

I think at the moment the so-called FEMA mindset you described 

is something that we certainly have to work on so as to make sure 

that the response and recovery functionalities of the Department 

are reflective and appreciative of the awareness, prevention and 

protection, sort of the pre-event, if you will, functionalities of the 

Department. 

So we are working very hard to make sure they are aware of 

that. And, of course, through IAIP, concentrating on prevention 

and protection and the awareness piece that I believe is absolutely 

an imperative to come in front of all of it. In other words, if we 

truly understand what is going on in the domain we are responsible for, we can build better prevention and protection and even 

response and recovery protocols. But the front end has got to be focused on information, intelligence, the sharing thereof, the analysis 

thereof and the understanding thereof. 

I don’t have an immediate problem with the FEMA mentality in 

EP&R as the response and recovery agents, so to speak, of the Department, but I do want them to appreciate that the Department’s 

responsibility is across the board. 

Mr. SHADEGG. Appreciate that, and it is an ongoing concern on 

my part. 

Let me flip to a different topic. I recently met with Marsha 

Florian, who is the TSA Federal Security Director at Sky Harbor 

Airport in Arizona. It is one of the largest airports in the Nation. 
37

We are the fifth largest metropolitan area in the Nation. We have 

100,000 passengers each and every day, 1,500 flights every day. It 

is the world’s busiest three-runway airport and it faces a lot of 

challenges. 

As you know, there is this artificial cap that has been placed on 

TSA employees by Congress, and I understand that in Phoenix, Arizona, as a result of that cap, we are literally forcing those people 

to work much longer hours than they are used to. We are trying 

to get the job done I think with too few employees to meet an artificial cap that I am not certain serves the public. 

I do know that there can be dire economic consequences if we 

drive people away from air travel because they can’t get through 

security lines in a reasonable amount of time, and of course everyone appreciates the fact that if in fact by trying to do the job with 

too few people we let something slip through, that is a catastrophe 

in itself. 

And I am interested in finding out whether or not the Department has looked at this issue, whether or not the congressional demand that you come down to, 45,000 employees, is an unreasonable 

demand for you to be able to do the job, and if it is, whether you 

are willing to come forward to the Congress and make that point? 

And if not, if you think you can do it with 45,000, how do you deal 

with an airport like Sky Harbor where, quite frankly, the caps on 

the use of personnel, at least I think, are currently causing delays 

and may be causing the possibility of a breakdown in potential security? 

Admiral LOY. Quickly, sir, this is obviously a topic that could 

take an awful long time to answer, but let me give you my quick 

answer. My experience at TSA is this, sir: We at TSA very likely 

overhired initially when we were pushing 55,000; 56,000; 57,000 

screeners. I think the focus that was offered by the cap became a 

constructive influence to make sure we were being efficient and effective along the way. 

I further believe that two other things play here. One is the fulltime/part-time challenge; in other words, the activity profile of an 

airport, even one as busy as Sky Harbor, has peaks and valleys to 

it associated with the day and with the week. So we are working 

very hard to try to live within the cap as it relates to full-time and 

part-time mix, varying at every given airport, in the hands of the 

Federal Security Director like Marcia is at Phoenix, to get the right 

package there for that particular airport. 

But I also believe that now we are literally back to pre-September 11 throughput, and in a place like Sky Harbor well beyond, 

there needs to be a mechanical device of some kind in the appropriations process that says when the throughput is wherever it is 

and it is growing and there has not been that technological breakthrough that we think will eventually be the answer, we need to 

be attendant to that as it relates to adequacy of TSA screeners at 

those airports. 

We have to challenge TSA to devise that. I didn’t get it done 

while I was there, so I have challenged them to devise that mechanical means to help us understand the predictive nature of if 

the throughput is going up, what is the attendant increase in 

screeners that would be appropriate? 
38

Mr. SHADEGG. My time has expired, but let me on that point 

make two points. One—. 

Chairman COX. The gentleman’s time has expired. Please be 

brief, because we have only got 10 minutes left in the hearing. 

Mr. SHADEGG. I will be very brief. My understanding is that 

some airports that were very efficient at the outset are now being 

punished by the fact that they were being efficient and if they are 

being pressed down after having been efficient in the beginning, 

they are hurting. Second, I believe the American people and I know 

that I would support an increase in the cap if you cannot get the 

job done with that arbitrary cap. It was created when the bill was 

passed without knowledge really of the task we were undertaking. 

Thank you, Mr. Chairman. 

Chairman COX. The gentleman’s time has expired. The gentleman from New Jersey, Mr. Pascrell, is recognized for 8 minutes. 

Mr. PASCRELL. Thank you, Mr. Chairman. Thank you, Admiral, 

for your service. I just want to make rapid questions here, and if 

you would make your answers brief, I would appreciate it. 

Admiral LOY. Sure. 

Mr. PASCRELL. We do not have a universal watch list, true or 

false? 

Admiral LOY. True. 

Mr. PASCRELL. We do not have a risk assessment which would 

highlight our most vulnerable assets, true or false? 

Admiral LOY. False. We have a pretty decent process by which 

we are prioritizing the critical infrastructure of our Nation. 

Mr. PASCRELL. Do we have a risk assessment then for the Nation 

which we have been asking for, a national risk assessment? Yes or 

no? 

Admiral LOY. I do not have a piece of paper to give to you, sir, 

but the effort of the aftermath of HSPD–7 will yield that for us. 

Our goal is to build precisely that. 

Mr. PASCRELL. My next question, Admiral, is you know we have 

discussed interoperability. This panel is very clear about it, the 

first responders are very clear about it. It is a disaster out there 

ready to happen again. Are you telling me that there is enough 

money in the budget that we do not have to have any money in 

the line item of interoperability, that is communication for our first 

responders, that we will have enough money in the rest of the 

budget left over from whatever program? 

Admiral LOY. I am going to actually ask if I can get back to you, 

Mr. Pascrell, on that, because I have put into motion a challenge 

that is not only about communications interoperability but includes 

equipment and training and the rest of that notion that is, I believe, an imperative for our Department. I have not got the budget 

feel that I would need for that quite yet, sir, so I will be glad to 

get back to you when I do. 

Mr. PASCRELL. My next question is what relationship do you 

have with the FCC in trying to get them to provide the adequate 

enough number of bands for our first responders which is a current 

problem and is a critical situation? And, secondly, is the FCC cooperating with you? 

Admiral LOY. So far they are, sir. 

Mr. PASCRELL. What are they doing to cooperate? Tell me. 
39

Admiral LOY. Well, they are attending the meetings that we are 

holding to develop whatever the plan is for the distribution of the 

bandwidth necessary to satisfy first responders’ needs as a critical 

imperative for our country. 

Mr. PASCRELL. So they are going to meetings. 

Admiral LOY. They are helping us develop the plan, sir. 

Mr. PASCRELL. Would you provide to the committee what plans 

we are talking about? 

Admiral LOY. Yes, sir. 

Mr. PASCRELL. So that we can communicate that to first responders all over the United States. 

You know, Admiral, you talk about the melding, the consolidation of grants. There is a very serious problem here as far as we 

are concerned and that is you have melded the fire grants, which 

have been very successful by everyone’s estimation, you have melded them with everything else. Fire grants go directly to communities. They do not go through the State so that no State—no 

State—can skim off any money that is going directly—it has been 

highly successful. Do you intend to change that process? 

Admiral LOY. No. 

Mr. PASCRELL. No. So we are going to continue. We are going to 

meld the money, but we are going to maintain that category—. 

Admiral LOY. We are not even going to meld the money. Those 

are specified—. 

Mr. PASCRELL. Well, how do you meld the programs without 

melding the money? 

Admiral LOY. Well, all we are trying to do is offer for their benefit, because they asked for it, the State and locals an opportunity 

to have a one-stop shop for the administrative processes associated 

with grant administration. 

Mr. PASCRELL. Do you realize the danger, Admiral, in doing that 

is that you will meld the basic needs that existed before September 

11, which prompted and precipitated the Fire Act of 1999, you are 

melding those basic needs with the terror needs of our police and 

our fire all over this country? 

Admiral LOY. I guarantee you, sir, that won’t happen. 

Mr. PASCRELL. Well, then why do we have less money for fire grants for 2005 than in 2004? In fact, $250 million less and $655 

million less for the COPS Program. If we are trying to defend 

America, how can we justify that? 

Admiral LOY. Well, I can justify it, sir. If you look at the total 

number of dollars, in the window between 1999 and 2001, we distributed from the Federal government, from the Congress of the 

United States about $1.3 billion. From 2002 to 2004, we distributed 

over $13 billion which was over a 900 percent increase. 

Mr. PASCRELL. Admiral, Admiral, you are doing exactly what we 

predicted was going to happen 5 months ago, and that is—. 

Admiral LOY. I am just giving you an aggregate number, sir. 

Mr. PASCRELL. Excuse me, sir. Excuse me, sir. What you are 

doing is consolidating very basis needs with needs dealing with 

prevention in response to terror. It is an absolute sham as far as 

I am concerned, and it does not do justice. 

I want to get quickly to the two questions that you and I have 

talked about, and that is the employees. Have any of our employees 
40

within the Department, within DHS, lost their collective bargaining rights as of today? 

Admiral LOY. I think only in the effort with putting together legacy Customs agents and legacy INS agents into the new CBP officer role. The promotion process that offered all of them constancy 

and consistency in their respective duties and responsibilities took 

them to a level where they were no longer appropriately represented in the bargaining process. They were—. 

Mr. PASCRELL. Excuse me, what does that mean. You took them 

to a level that they are no longer appropriately—. 

Admiral LOY. They are now 13s as opposed to 12s, and it took 

them out of the window of the bargaining package that was there 

before. 

Mr. PASCRELL. Could you translate that for me what you just 

said, I am sorry. 

Admiral LOY. Yes, sir. I didn’t say that well—. 

Mr. PASCRELL. I am trying to follow you. 

Admiral LOY. —and I apologize. 

Mr. PASCRELL. No, you said it well, but I didn’t understand you. 

Admiral LOY. In the recent efforts to recognize the differences in 

pay associated with INS players who went into the portal effort 

and became CBP officers and from a different source legacy Customs officers came, there were differences in the pay scales associated with what they had used to do with their legacy agencies. 

Their new responsibilities in One Face at the Border offered the requirement that we would merge all of that into a single package 

and we made absolutely certain that no one lost any pay by promoting, if you will, advancing in the pay scale the folks that came 

from INS, and the equivalency there offered them a point on the 

scale where they dropped away from being represented collectively. 

Mr. PASCRELL. Thank you for clarifying your answer. I would like 

to yield so that Mr. Etheridge will have some time. 

Mr. ETHERIDGE. I thank the gentleman, and I know time is running short. 

Chairman COX. Mr. Etheridge, just to advise you, I will not count 

this time that I am speaking against you, but literally the time has 

gone out just now. 

Mr. ETHERIDGE. Okay. 

Chairman COX. So I would yield to the gentleman to put a question but hopefully we will come back with more time. 

Mr. ETHERIDGE. I will wait for my turn. 

Chairman COX. If that is correct, then the gentleman’s time is 

expired. The gentleman from Connecticut, Mr. Shays, is recognized 

for 5 minutes. 

Mr. SHAYS. thank you, and I may not even need to use my 5 minutes. Welcome, Admiral. 

Chairman COX. If the gentleman would suspend. Admiral Loy, 

we understand by prearrangement that you are here until 12:30. 

What is your schedule at this moment? Might you stay for an additional 10 minutes? 

Admiral LOY. I can, sir. 

Chairman COX. That being the case, the gentleman is recognized 

for 5 minutes and we will—. 
41

Mr. SHAYS. Thank you very much. Admiral, I think you have a 

mammoth task to bring together the people all over the country 

and have those synergies work well. Ultimately, though, if you do 

succeed, it will be a tremendous contribution to our country. 

I would like to focus in on how you deal with the following while 

you are trying to reorganize. And the following is I happen to believe there will be a terrorist attack or more during the course of 

this year. We have to deal with the World War II Memorial, we 

have to deal with the G8 Summit, we have two conventions, we 

have the presidential election and then the inaugural. And I would 

like to know how you get involved in these issues as the Deputy 

and how you task your folks to deal with these issues? 

Admiral LOY. Sir, I think you are right on to reflect on the schedule of events in front of us. It begins with the World War II Memorial and includes the conventions, it includes the Olympics, it includes the G8 Summit, it includes a number of high-profile events 

coming at us. 

We began, at the Secretary’s direction, at the President’s direction, I might add, 3 weeks ago an interagency security planning effort that, if you will, takes a HSPD7 and puts it on steroids—accelerates it, focuses it in such a fashion that we are enormously attentive between now and over the course of the next six to 8 months 

to the intelligence stream going by and the attendant requirement 

to upgrade our security paradigms wherever we would think that 

to be the most appropriate. 

We would happily come perhaps in closed session, sir, and help 

you understand precisely what we are doing in that regard, but you 

have very correctly recognized an upcoming window that in wake 

especially of the Madrid bombings and what appears to at least 

have been a political consequence reached on the basis of terrorist 

behavior, that we will watch carefully, for example, the Italian 

elections and the Polish elections and the Philippine elections that 

will also happen before our own. 

What we have done, sir, is establish five working groups inside 

the Department with the attendant reach requirement to go all 

places necessary to pull together a game plan that we will present 

back to Secretary Ridge by the end of this month and hold into 

place in a sustained manner across that window of time you just 

described. 

Mr. SHAYS. Let me just make a comment, and I don’t need an 

answer, but I hope and pray that when the Department issues 

warnings and if we go to an elevated level, that we don’t have the 

department say, ‘‘Just do what you normally do.’’ If, for instance, 

we believe that you are at greater risk by going to an event, let 

people like adults decide whether they want to go. They may, for 

instance, decide to go to the Olympics but not take their 4-year-old 

children or 10-year-old child or whatever. They may decide to go 

to the convention but maybe they will change their behavior a little 

bit. And I know you don’t want to discourage from going but allow 

them the adult decision. 

I can tell you this: I will ask for any briefings during that time, 

and if I believe that there is something that that public needs to 

know about, while I won’t disclose it, I will certainly voice my concern and say what I would be doing as a Member of Congress 
42

based on what I have seen. I hope that you will treat the American 

people like adults and do that. 

Admiral LOY. Yes, sir. I am with you on the general notion that, 

first of all, I think it is our obligation to share information that we 

have that would put anyone in danger as to what the information 

is and allow those judgments to be taken by our citizens. 

Chairman COX. Gentleman’s time has expired. Mr. Etheridge is 

recognized for his full five minutes. 

Mr. ETHERIDGE. Thank you, Mr. Chairman, and I trust I won’t 

take it all. I am going to return, Admiral Loy, back to a point that 

was made earlier as it relates to CIS. I realize that is one area of 

a broad area of responsibility, as others have said, but in our office 

and I know in a lot of other offices, this is an area that we get overworked in tremendously. It would be a lot easier if we got a lot 

more prompt response. 

Last year, the independent auditor’s report indicated that the 

Bureau of Citizen and Immigration Service process for tracking 

and reporting the status of applicants and related information was 

inconsistent and inefficient. Now, I would contend, and our response in our office, that hasn’t changed a lot. And every person 

that is come before this committee, I am going to say to you, I have 

raised this same question, when are we going to be computerized—

you have heard this already. 

Admiral LOY. Sure. 

Mr. ETHERIDGE. They will say, ‘‘Well, we have got a timeline.’’ 

Last time I asked, I said, ‘‘Please give me a data.’’ Well, I get a 

date and the date slips. And others have talked about it here. But 

I am going to give you just one example, there are a lot of other 

examples, but when you have to keep going back and you keep 

going back, it takes up time, a tremendous amount of personnel 

time for our folks, for the people at INS and the service areas. 

It is just bogging down, and part of the reason, and it was talked 

about a few minutes ago, so I am going to repeat it again, because 

I think it has got to be on the record, we have got to get it done, 

these things are not computerized; they are in boxes. They are still 

in paper boxes. And when it takes up for just a I–130 visa application for people who are citizens of this country now, when they are 

just trying to reach out to their spouse, over 2 years to get something moving, that is unacceptable. 

Admiral LOY. It is unacceptable, I agree, sir. 

Mr. ETHERIDGE. And what I want to know is what specific steps 

is DHS management tracking this system that you are going to address the inefficiencies and get a handle on this backlog, because 

as was said a few minutes ago, it is not getting less, it is growing, 

and I fear if it continues to grow, we aren’t going to be able to deal 

with the issues, and the violations are going to get even greater. 

Admiral LOY. Yes, sir. I think this issue is an absolutely right 

square one for us to take and address with the leadership and 

management necessary to make it right. It is a system that has 

plagued our country, frankly, for tens of years, and when this 

brand new department inherited the responsibility for it, that was 

recognized by this President who indicated, ‘‘Let’s get that backlog 

management from whatever those horrible numbers are down to 
43

something that is reasonable.’’ That is precisely where we are 

going. 

We have established five major pilot programs to reengineer the 

processes inside each one of the systems you were describing, 

whether it is the I–130 or the many other systems that they are 

responsible for, and get out of there things that don’t need to be 

done and make more efficient things that do need to be done. 

What I can tell you, sir, is that the IT piece is well recognized, 

but there is—I don’t have a date on the horizon that I would even 

pretend to share with you at this time. 

Mr. ETHERIDGE. Admiral, I know we are struggling because we 

don’t have an answer for it right now. Can you get back with a 

timeline? 

Admiral LOY. I will be delighted to get back for you, sir, a game 

plan to fix that. 

Mr. ETHERIDGE. So we can have a timeline of—please. 

Admiral LOY. You bet. 

Mr. ETHERIDGE. So we will have it in writing. If you will do that, 

I appreciate it. And, finally, let me move to one other issue and a 

lot of the stuff I have here has already been covered. 

In looking over the report, the Inspector General’s report, the Division Chief Information Officer and others had a turnover of about 

45 percent, which is substantial since the Department opened its 

doors. And we have heard that a number of the directorates, such 

as IAIP, are having problems getting people to take positions they 

need to move them into and fill some of the gaps. And they are now 

being filled with contractors. 

My question is can you help us understand why the turnover is 

as high as it is and how we are planning at DHS to address the 

turnover and the directorate staffing needs? And if it is being 

staffed by contractors, how long will this last and how long before 

we will staff it with full people, and is there a cost savings? 

Admiral LOY. Yes, sir. Let’s take the IAIP piece first. One of the 

things that I asked the committee’s support of as we engage with 

the Armed Services Committees and others is to get this Nebraska 

Avenue complex thing behind us. Let’s get that established as the 

headquarters for the foreseeable future with the attendant office 

spaces there that are appropriate to allow us to hire up IAIP to its 

allotted FCE. 

General LaBute has committed to not only me but to the Congress in the form of the Appropriations Committee a hiring plan 

that at 50 per month over the course of the next several months 

he will find himself hired up to complement. 

In the meantime, the combination of contractors and detailees, if 

you will, from attendant agencies inside the Department, has enabled him to get on with some of the work that he is responsible 

for, certainly the most important work. 

I am one who will challenge him as to whether or not the budgeted input you were just describing, the good steward input associated with whether or not he can get done, what is the mix that is 

best appropriate for him to deal that with? President’s management agenda includes an outsourcing notion that offers us an opportunity in this cabinet agency to establish a manpower paradigm 

that may very well be different than what has been used in the ex-
44

ecutive branch in the past. And if contractors and outsourced 

functionality is the best way for us to get done what we need to 

get done, that is the way we plan to go. 

Mr. ETHERIDGE. Thank you. And only one thing I would say on 

the contracting and I will yield back my time. I want us to be careful because contractors have already gotten us in trouble in some 

others areas of the world—. 

Admiral LOY. Indeed. 

Mr. ETHERIDGE. And we don’t want that to happen again. And 

I hope we will have more to say about that later, and I yield back, 

Mr. Chairman. 

Chairman COX. Gentleman from Washington is recognized. 

Mr. DICKS. Thank you, and I will be very brief because I know 

we have got to go to a vote. 

Admiral Loy, it is good to see you again. I consider you one of 

our best public officials, and I am glad to see you in this job. And 

our colleagues have outlined a number of challenges for you, the 

information we have on the implementation of the utilization of information technology being one of them, and I am very glad to hear 

this mentioned time and time again. 

All of the reports done by all the outside agencies keep pointing 

to this one area, and the database on counterterrorism is the kind 

of the thing that has to get done. And if you can get anything else 

done, I would try to work on that watch list database so we have 

one area where we can check all the names. To let this go on and 

on without bringing it to culmination is simply unacceptable. 

Admiral LOY. We will be a demanding customer. 

Mr. DICKS. All right. Number two, on the TSA limit, I didn’t realize and staff informed me today, this was something that was done 

in the Appropriations Committee. I would love it if you guys could 

come up with some language that would help us. I am prepared to 

talk to the chairman who is a member of this committee about that 

as well. 

We have the same problems in Seattle. You and I talked about 

that at some length earlier. You have got to have enough people—

you have got to give them the ability to manage. Set a limit on dollars or whatever, but you have got to give them the ability to manage the situation, so if you need more people at a particular time, 

you can do it. I think an arbitrary limit, especially now that traffic 

has recovered, doesn’t make any sense. 

And the other thing I would just mention since you are a top official in the Department: we had a hearing yesterday on the whole 

question of port security, and I don’t think the position of the administration is tenable—that port security is just going to be handled by the local port authority. We are not getting anywhere near 

the money that the Coast Guard says we need to do port security 

adequately. And Congress has had to add the money for port security. This is the first year that Congress even had an appropriation 

request for money for port security from the administration. But 

we have got to figure out a better solution than this, and to let this 

thing go on and not protect our ports. 

Just remember what happened when we had the lockout on the 

west coast just for a few days. All of a sudden it was affecting the 

economy of the entire country. And if we don’t make sure we have 
45

got good security at these ports, we are leaving ourselves open to 

a major vulnerability. And the Coast Guard has, I think, laid out 

what is necessary—$1.5 billion the first year and $7.5 billion over 

10 years, and we are not anywhere near that. I hope you will take 

a look at that because of your background, your expertise and experience as the commandant of the Coast Guard. 

Admiral LOY. I will, sir. 

Mr. DICKS. Thank you. Thank you, Mr. Chairman. 

Chairman COX. The gentleman’s time has expired. Thank you 

very much, Admiral Loy, for being with us all morning and part 

of the afternoon. The record will remain open for members to submit written questions for a period of Ten? And we would appreciate 

the Department responding to those formally as well. 

Admiral LOY. Will do, sir. 

Chairman COX. The hearing is adjourned. 

[Whereupon, at 12:42 p.m., the committee was adjourned.] 

(47)

A P P E N D I X 

QUESTIONS AND RESPONSES FOR THE RECORD

THE HONORABLE JAMES M. LOY RESPONSES

QUESTIONS FOR THE RECORD FROM THE HONORABLE JOHN E. SWEENEY

1. Admiral Loy, a recent GAO study (June 30, 2003) analyzed federal government efforts to coordinate geographic information system (GIS) activities. The study concluded, ‘‘to date, the potential of GIS has not been fully 

realized. While steps have been taken to improve the coordination of government GIS efforts, much more work still needs to be done to round out 

a comprehensive set of standards and to ensure that they are broadly applied.’’ I am concerned that this is particularly true within the Department 

of Homeland Security. Are you supportive of efforts to consolidate GIS activities under the Chief Information Officer at DHS? Are steps being taken 

to achieve this goal? 

Answer: 

The DHS Geospatial Management Office (GMO) has been established within the 

DHS Office of The Chief Information Officer (CIO) and is currently operational 

within the Department. The GMO is responsible within the Department to coordinate geospatial information needs, requirements and other related spatial data activities that support the Enterprise Geospatial Information System (E–GIS) capability. The GMO will provide clear and concise policy direction across the Department as needed for an E–GIS geospatial information capability. The GMO will guide 

the development and execution of the implementation plan for the geospatial 

enablement of DHS mission systems. The plan will provide a common set of 

geospatial data management and processing capabilities that will be incorporated 

into the emerging Homeland Security (HLS) Enterprise Architecture. This will allow 

the Department to further enable awareness, prevention, protection, response, recovery of the homeland security mission. 

The GMO has already produced a significant body of work, including a strategic 

plan, and a forward-looking Enterprise Architecture for Geospatial activity in the 

HLS mission space. While standards are an essential piece they can not alone resolve the challenges in achieving effective geospatial management. We believe the 

key to interoperability is the overall strategy, of which standards are a critical component. Through the GMO, we are developing a full strategic solution for the HLS 

mission and for the Department. Although DHS does have significant challenges of 

coordinating the activities of the 22 incoming agencies from which it was formed, 

the opportunity is in front of us to affect an enterprise solution set which will make 

a significant contribution to the interoperable solutions which the National Spatial 

Data Infrastructure (NSDI) has been fostering over the last 10 years. 

Additionally, the Department is a partner agency of the President’s Geospatial 

One-Stop initiative. The purpose of this government-wide effort is to provide Federal, state, local, and tribal agencies with single-point of access to map-related data 

enabling consolidation of redundant data. Its goal is to improve the ability of the 

public and government to use geospatial information to support the business of government and improve decision-making. Through this initiative and the work under 

the Federal Geographic Data Committee, the Department is an active participant 

toward achieving the shared goals of improved geospatial management and coordination.

The President’s budget included $5 million for the coordination of 

geospatial management activities within the CIO’s office. I am concerned 

that this falls far short of what is needed to move forward in this area. The 

GAO study suggested, ‘‘Priority should be given to ensuring that the federal government promotes common GIS standards wherever practicable, 
48

facilitates participation by all stakeholders, and as a result reduces redundant systems and data collection efforts. What steps is the Department taking with these limited resources to meet these objectives?

Answer: 

The Department maintains its goals of coordinating geospatial activities across 

the DHS enterprise, continuing to develop and implement the Geospatial View of 

the DHS Enterprise Architecture, consolidation of capital asset planning, and promoting a well defined and documented strategic approach to interoperability of information systems utilizing the power of location and time in a Geospatial reference 

frame. The DHS Operational Elements? Geospatial efforts contribute greatly to the 

overall DHS Geospatial activities. Based on the current funding levels, the Department will be able to accomplish the initiation of the identified need in fiscal year 

2005. 

Across the Federal government, work on common standards continues under the 

Geospatial One-Stop initiative. Through partnership with state and local organizations, Geospatial One-Stop developed thirteen standards to improve sharing and use 

of geospatial data. The Federal Geographic Data Committee is now building from 

these initial standards to identify other opportunities for standards development.

Some of my colleagues have introduced bills to consolidate GIS activities 

within the CIO’s office at DHS. Could you provide the committee with your 

views on these proposals?

Answer: 

The Department has analyzed each of the bills to which you are referring. While 

they each share a common goal of legislating the introduction of a program management office for geospatial activities, under the DHS Office of the Chief Information 

Officer (OCIO), they diverge in details beyond that. Each has a varying level of detail defining business approaches, policies, and descriptions of the ‘‘geospatial landscape’’, and in varying ways, appear to define the solutions to some of the well 

known issues. Senators Akaka, Collins, and Lieberman have proposed the amendment, ‘‘A bill to provide for additional responsibilities for the Chief Information Officer of the Department of Homeland Security relating to geographic information.’’, 

to S.1230 that DHS supports. This amendment provides the DHS OCIO the authority and responsibilities necessary to meet the geospatial goals and objectives required of the Department.

2. I expressed my concern two months ago to Secretary Ridge that S&T 

is not moving quickly on SAFETY Act applications for procurements of 

anti-terrorism technologies. In fact, I have heard complaints the directorate is reviewing the applications for qualification almost like an FDA 

drug approval process. 

The SAFETY Act was meant to replace Public Law 85–804 as mechanism 

for addressing insurable liability exposure for high-risk homeland security 

procurements. The process that DHS/S&T has in place currently is not expedited the deployment of the technologies needed for these procurements 

and they are being held up. The information requested is extremely excessive, the process is too bureaucratic, and there is not a lot of confidence 

S&T will qualify anything any time soon. 

U/S McQueary went on the record stating no company spent more than 

120 hours completing a SAFETY Act application. I know for certain that 

one company spent 700 hours on the SAFETY Act application and an additional 300 hours—for a total of over 1,000 hours—on just one application for 

one anti-terrorism technology. 

I am especially concerned that New York will remain vulnerable to future acts of terrorism if we don’t see a more aggressive approach in getting 

these solutions deployed immediately (before the RNC), especially technologies that have already been used by the government/military, and are 

now being modified for homeland security purposes. 

Specifically, when will the bulk of current applications be approved? 

How many projects—Federal, state, and local—do you expect to approve for 

SAFETY Act coverage this year based on the number of applications submitted thus far?

Answer: 

Your question, and other similar questions from other members of Congress, expresses concern that the process established by the Department to implement the 

SAFETY Act is overly complicated, burdensome, operates to deter applications, and, 

perhaps most importantly, is more comprehensive than intended by Congress. I understand your concerns and your desire for a more streamlined process. However, 
49

I believe the process the Department has implemented is consistent with the minimum requirements of the Act. 

The statute is quite specific in the elements the Secretary is required to consider 

when evaluating an application for either tier of SAFETY Act protection. Destination, the lower tier, which provides the seller with a limitation on liability, requires consideration of at 

least the following seven criteria: 

1. Prior United States Government use or demonstrated substantial utility and 

effectiveness. 

2. Availability of the technology for immediate deployment in public and private 

settings. 

3. Existence of extraordinarily large or extraordinarily unquantifiable potential 

third party liability risk exposure to the seller or other provider of such antiterrorism technology. 

4. Substantial likelihood that such anti-terrorism technology will not be deployed unless protections under the SAFETY Act are extended. 

5. Magnitude of risk exposure to the public if such anti-terrorism technology is 

not deployed. 

6. Evaluation of all scientific studies that can be feasibly conducted in order to 

assess the capability of the technology to substantially reduce risks of harm. 

7. Anti-terrorism technology that would be effective in facilitating the defense 

against acts of terrorism, including technologies that prevent, defeat or respond 

to such acts. 

Certification, which affords the higher level of protection of the presumed government contractor defense, requires the Secretary to (1) conduct a ‘‘comprehensive 

review of the design of such technology and determine whether it will perform as 

intended,’’ (2) determine if the technology ‘‘conforms to the [s]eller’s specifications,’’ 

and (3) determine that the technology is ‘‘safe for use as intended.’’ In addition, the 

statute requires each applicant for certification to conduct a safety and hazard analysis on the technology and to provide the results as part of the application. 

If the Department was to limit its role in evaluating applications for designation

to conducting a basic analysis of the technology to confirm that it actually works 

and would not pose an inherent risk of injury to others, the Secretary would only 

be considering criterion 7 and part of criterion 6 rather than all seven criteria as 

required by the Act. While the Department does not interpret these requirements 

to require the actual testing of each technology by DHS, it does believe compliance 

with the statutory requirement to review ‘‘all scientific studies that can feasibly be 

conducted’’ for every application for designation and the requirement to conduct a 

‘‘comprehensive review’’ for applications for certification necessitates at least the 

level of review established by our existing procedures. 

You also expressed concern with the number of hours some companies have invested in completing The SAFETY Act application. To obtain specific data on this 

issue, the Acting Director, Office of SAFETY Act Implementation, personally spoke 

with each company that submitted a full application to obtain feedback regarding 

the time and effort each company invested in completing the application. The responses indicate that the amount of time was proportional to the size of the company, with small to medium sized organizations spending considerably less time 

completing the application then did large corporations. Overall, most organizations 

spent approximately 150 hours to complete a full application. The least amount of 

time reported to complete an application was 25 hours and the most was 1000 

hours. 

Discussions by the Acting Director, Office of SAFETY Act Implementation, with 

the single applicant that spent the 1000 hours indicate that the extensive amount 

of time required for this applicant to complete the application was primarily a result 

of its internal decisions on how to address the application and its existing internal 

policies and procedures, not from the complexity of the application itself. Confirmation of this assessment came from discussions with two applicants of similar size; 

one reported its application took no more than 100 hours across the entire company 

and the other reported 200 hours. Based on this information, the Department is confident that it is the business practices of the particular applicant resulted in the extraordinary investment of time in the application and not the application or the Department’s implementation of the Statute. Nevertheless, the Office of SAFETY Act 

Implementation has substantially completed a major revision of the application kit, 

including the application forms, their instructions, and general information on the 

SAFETY Act and the Office of SAFETY Act Implementation. These changes were 

based on comments solicited from applicants, industry associations, and congressional staffers. The Department believes the revised application kit addresses the 

issues raised in your question and will be well received by industry once issued. The 

revision is currently being finalized at the Department level. 
50

I do share your desire that our process not cause applications to be unduly delayed and I am confident this is not the case. As of May 21, 2004, the Department 

has received 84 pre-applications and 18 full applications. In addition, there are an 

additional 50 pre-applications and 22 full applications in various stages of completion on the SAFETY Act web site. With the exception of one pre-application still 

under review, all of the pre-applications have been reviewed and comments provided 

to the applicants. Of the full applications received, 11 were deemed incomplete, 

eight have been evaluated by the Office of SAFETY Act Implementation and are 

now awaiting final action by Under Secretary McQueary, and three are in various 

stages of the evaluation process. Let me assure you that the Department is sensitive 

to the issue of timeliness, and we are proud that the evaluation of each complete 

application for designation or certification under the SAFETY Act has been accomplished in less than the 90 days allocated in the interim regulations. Final action 

on the eight applications by the Under Secretary for Science and Technology is imminent and will be within the 30 days allocated in the interim regulations for each 

of the pending applications. In summary, each and every application for designation or certification under the provisions of The SAFETY Act has been processed within 

the time frames set forth in the interim regulations. 

Finally, you ask for a prediction on the number of applications the Department 

anticipates receiving for the balance of this year. This is the first year of a new program and we have no basis to provide a numerical estimate. The Department does 

believe the imminent announcement of the first group of designations and certifications, coupled with our various outreach programs, will generate a significant increase in the rate of applications for the balance of the year. The Department would 

be pleased to provide periodic status reports regarding the number of applications 

received to your office and Congress if desired.

3. In TSA’s procurement of homeland security related technologies, is 

TSA requiring as part of its solicitations that companies bidding on such 

solicitations apply for coverage under the SAFETY Act? If not, why not?

Answer: 

TSA does not include in its solicitations for transportation security related technologies the requirement that companies bidding on such solicitations apply for coverage under the SAFETY Act. Neither the SAFETY Act itself nor any other provision of law requires that companies apply for such coverage. Applying for coverage 

under the SAFETY Act is a discretionary act; contractors may choose to apply for 

such coverage, but whether one does so or not is a business decision on the part 

of the company. 

QUESTIONS FOR THE RECORD FROM RANKING MEMBER JIM TURNER

Enhancing the Strategic Focus 

4. In addition to dealing with day-to-day challenges, one of the responsibilities of senior management is to think strategically—over the long 

term—about the priorities of the Department, and ensure that its workforce, its programs, and its processes are all working together to achieve 

desired results. I think this is especially important for the Department of 

Homeland Security. While you have a lot on your plate to deal with every 

day, it’s vital for you and your colleagues to make sure that you think strategically about how best to protect our country, using all sources of information that now reside in the new Department to help you chart your future course. Related to this point, I think it’s important to have concrete 

performance standards and metrics in place that can be used to determine 

whether the Department is truly achieving its objective of making us safer 

from the multitude of threats we face. Along these lines: 

Would the Department benefit from a dedicated strategy office that 

could, in part, look at the long-term threat posed by terrorism to the 

United States, analyze and evaluate ways in which terrorists could attack 

us over the long-term, and make recommendations on the long-term strategy and investment priorities of the Department? 

If not, what office in the Department is currently engaged in such strategic work? Do they have ready access to you and Secretary Ridge? It does 

not exist, should it be created?

ANSWER: 

The Department agrees that strategic thinking and planning is vital to ensuring 

homeland security. It is also important that we establish concrete performance milestones and metrics to determine how well we are achieving our strategic goals and 

objectives. The Department already has put in place the structure to support these 
51

issues. The Department established the Program Assessment and Evaluation Office 

(PAE), under the office of the Under Secretary for Management. PAE handles development and coordination of the strategic plan, tracking of strategic issues and coordination of performance based Planning, Programming, Budgeting and Execution 

(PPBE). PAE coordinates with all of the organizations within DHS to ensure that 

all planning and programming is cohesive and tracks performance through quarterly accountability reports. 

The Department’s first high-level Strategic Plan was released in February. This 

Strategic Plan set forth the vision and mission statements, core values, guiding 

principles and strategic goals and objectives that provide the framework to guide the 

actions that make up the daily operations of the Department. The full breadth of 

our activities is guided by the high-level goals of: Awareness, Prevention, Protection, 

Response, Recovery, Service, and Organizational Excellence. The Department’ Strategic Plan and additional planning guidance provides focused guidance for departmental objectives and provide the standards for accurate and concise measurement 

of agency performance. 

To help match the Department’s resources with operational strategy, the Department has instituted a long-term comprehensive planning, programming and budgeting system to support development of the Future Years Homeland Security Program (FYHSP). This is a step-by-step strategic decision-making process and links 

the threat assessments, resource constraints, and the policy intentions of our political leadership to the thousands of detailed readiness actions needed to meet the 

missions of the Department of Homeland Security. The system aligns resources to 

programs that support the Department’ objectives, demonstrate accountability, are 

performance driven, have identified long term benefits, and meet the Department’s 

priorities. 

Direct input into the Department’s strategic planning and programming process 

comes from the Information Analysis and Infrastructure Protection (IAIP) Directorate. IAIP is a full partner and consumer of all intelligence-generating agencies, 

such as the National Security Agency, the CIA and the FBI. IAIP coordinates and 

develops the long-range strategic assessments concerning the nature of the terrorist 

threat facing the country. Based on the threat assessment, IAIP and other components of the Department such as the Border and Transportation Security Administration, Coast Guard, Science and Technology Directorate, Emergency Preparedness 

and Response Directorate develop short-term and long-term strategies to counter 

the projected threat. In addition, the Department has established an Operations Integration staff to coordinate interagency strategy and operational planning. The 

heads of these organizations have direct access to both the Secretary and Deputy 

Secretary.

Status of Implementing GAO Recommendations 

5. The Congress looks to GAO to recommend improvements in government operations. Along that line, I asked GAO to provide the status report 

on the Department’s activities to implement previous recommendations 

GAO has made, including to its legacy agencies. GAO informs me that of 

the several hundred recommendations it made to DHS, appropriately 110 

are what GAO considers ‘‘key’’ recommendations. 

Indeed, many of these recommendations are targeted to specific program 

areas within the various Department directorates. However, others are intended to improve operations and management department-wide. As an example, last August GAO recommended that, in developing its enterprise architecture for computer systems, the Department should coordinate with 

various federal law enforcement agencies, state and local authorities, and 

the private sector to foster information-sharing initiatives and to eliminate 

possible confusion and duplication of effort. 

What is the status of your fully implementing GAO’s recommendations? 

What are the factors that may limit your ability to implement more?

Answer: 

Per the chart below, as of May 2004 GAO reports an estimated 354 recommendations for DHS and 112 of these are high priority; and 103 of the total recommendations are considered closed. Of the high priority recommendations, over half are 

pending review for completion at GAO. It also should be noted that the preponderance of the open recommendations are associated with legacy agencies prior to the 

establishment of DHS and some date back as far as 1997. As a result, it is extremely difficult or impossible for current DHS personnel to assure implementation 

for recommendations associated with legacy departments. We have assessed these 

recommendations and are in on-going negotiations with GAO to close those identified with the legacy organizations.
52

Status and Priority of GAO Recommendations to DHS 

Priority Code Open Under 

Review * In Progress Closed ∼ Total 

High 30 4 44 34 112

Moderate 55 5 19 17 96

Low 77 10 7 52 146

Total 162 19 70 103 354

Notes:

* Under review means that DHS has taken action and provided some documentation in response to the rec- ommendation that they believe should be sufficient to close the recommendation. That action and documentation

are ‘under review’ by the GAO team that initiated the recommendation.

# In progress means that DHS is taking action in response to the recommendation but has not fully implemented

it.

∼ All ‘closed’ recommendations have been closed by the GAO initiating team.

Suspected $1.2 Billion Budget Shortfall

6. In March of this year, DHS announced a hiring freeze at two of its 

frontline units, CBP and ICE because accounting staff were uncertain if a 

suspected $1.2 billion budget shortfall was real or an accounting irregularity. DHS reportedly has three different pay systems that do not use the 

same budgeting principles and budget codes. What is the department doing 

to better integrate its financial systems to ensure that such an incident is 

not repeated?

Answer: 

Staff from the Department’s Office of the Chief Financial Officer (CFO), Border 

and Transportation Security (BTS) Directorate, and the U.S. Citizenship and Immigration Services (USCIS) have briefed your staff on the circumstances and facts surrounding the alleged $1.2 billion shortfall as reported by The Wall Street Journal.

The Department also established a review team composed of staff from the CFO’ 

Office, BTS, USCIS, and the U.S. Coast Guard to assess the situation. The review 

team engaged in a detailed budget reconciliation effort between the three bureaus. 

The team examined the allocation of resources and services throughout the three 

bureaus, and this effort resulted in an immediate internal realignment of $212 million. A subsequent internal realignment of approximately $270 million is possible, 

pending additional discussions and coordination on the final documentation and billing. There is no $1.2 billion shortfall as reported by The Wall Street Journal. 

The Congress has recognized that funds may need to be realigned between ICE, 

CBP, and USCIS. In the Joint Explanatory Statement (H. Rpt. 108–280) accompanying the Department of Homeland Security Appropriations Act, 2004 (Pub. L. 

108–90), the Congress recognized that the budgetary resources may need to be realigned. Specifically, the Congress noted: ‘‘The conferees are aware that the Department is conducting a comprehensive review of administrative and other mission responsibilities, particularly as they affect ICE and other agencies that have inherited 

multiple legacy missions. While funding provided by this conference agreement is 

based on the best possible information available, the conferees understand there may 

be a need to adjust funding to conform to the decisions resulting from the review.’’ 

A similar statement was included under the heading discussing CBP. 

While unrelated to the budget review discussed above, when DHS was established 

one and one half years ago, it blended 22 distinct agencies and bureaus inheriting 

a myriad of redundant management functions, processes, and systems: for example, 

40 general ledgers, 30 different procurement processes, and 20 different approaches 

to managing travel costs. In fiscal year 2005 DHS will implement the new finance/

accounting/budget resource management system, eMerge2 (Electronically Managing 

Enterprise Resources for Government Efficiency and Effectiveness), that will transform disparate business and financial management systems into one, uniform, electronic solution for the Department. It will support a ‘‘one environment’’ model with 

common core processes that is critical to the success of DHS. eMerge2 will provide 

decision-makers with critical business, budget, accounting, procurement, grants, assets, and travel information in near ‘‘real time;’ and eliminate stovepipes between 

components. 
53

The Department is committed to the security of the nation and we will continue 

to work towards successful operation of the three bureaus—CBP, USCIS, and ICE. 

To that end, we will continue to work with the Congress, to ensure that funds are 

aligned to mission objectives and are consistent with congressional intent. 

QUESTIONS FOR THE RECORD FROM REP. LOUISE M. SLAUGHTER

The proposed regulations eliminate the Merit System Protection Board of its current authority to modify agency-imposed penalties in DHS cases involving removal 

and adverse actions of employees.

7. Please explain (a) why has the standard of evidence for MSPB cases 

been drastically decreased when it is the committee’s understanding that 

agencies currently win over 80 percent of their cases brought before the 

MSPB? (b) how does this comply with the Congressional intent of the 

Homeland Security Act that employees are entitled to fair treatment in any 

appeals that they bring and are entitled to due process?

Answer: 

We note the concern you and other members of Congress have expressed on this 

issue and are examining this issue very closely as we draft the interim final regulations for the Department of Homeland Security.

8. The Homeland Security Act requires that the new system ensure that 

employees may organize and bargaining collectively. Yet, the proposed regulations practically wipe out full collective bargaining rights by allowing 

DHS to set working conditions through non-negotiable department regulations. 

How does this comply with the Congressional intent of the DHS Act that 

employees have meaningful collective bargaining rights?

Answer: 

The proposed regulations still require bargaining over procedures and appropriate 

arrangements over lay-offs, retention, discipline, leave, and promotions. In addition, 

bargaining over procedures and appropriate arrangements for other core management rights is not prohibited and may occur at the discretion of management. If no 

bargaining occurs, management through a consultative process is required to consider union views and recommendations.

9. The proposed regulations also severely curtail if not eliminate collective bargaining rights over most core day-to-day operational decisions, 

such as the assignment of work, the deployment of personnel, and the use 

of new technology by DHS personnel. Other issues would have to have a 

‘‘significantly effect a substantial portion of the bargaining unit’’ before 

even being subject to post impact and implementation bargaining. 

Could you please define for the committee, the Department’s definition 

of ‘‘significant impact’’ and ‘‘substantial portion’’ of a bargaining unit?

Answer: 

The intent of this change is to focus bargaining on matters that are of significant 

concern and relieve the parties of potentially lengthy negotiations over matters that 

are limited in scope and effect. The proposed Homeland Security Labor Relations 

Board will have jurisdiction over negotiability and duty to bargain disputes and will 

through case law or advisory opinions further define these terms.

10. The proposed regulations reassign many of the functions of the independent Federal Relations Labor Authority (FLRA) to a new ‘‘in-house’’ 

DHS Labor Relations Board, composed exclusively of members appointed 

by the Secretary. 

Why do the proposed regulations gut the ability of the FLRA, an independent arbiter with decades of experience, to make these decisions? At a 

minimum, why can’t employee representatives’ have a role in appointing 

members of this ‘‘in-house’’ DHS Board?

Answer: 

DHS believes that an independent Homeland Security Labor Relations Board 

dedicated to adjudicating DHS cases will provide a needed mission focus and homeland security expertise to dispute resolution. In addition, having a single Board 

oversee a unified dispute resolution process will promote more efficient and effective 

decision making. It should be noted that the regulations do propose that the FLRA 

continue to oversee representation elections and retain its jurisdiction over the handling of unfair labor practice charges concerning the rights and obligations of individual employees. 
54

While the proposed regulations require that the Secretary appoint the Board 

members, the regulations are silent on how candidates and potential candidates 

might receive consideration. We plan to consider different ways to accomplish this 

while at the same time recognizing that Board independence is critical.

11. The proposed regulations create the establishment of two new entities, the DHS Labor Relations Board and an internal DHS panel to consider 

appeals involving mandatory removal offenses. Yet, in the proposed regulations, it is clear that the department is uncertain as to what type of judicial 

review will be available from decisions of these new groups. 

Can you please describe to the committee what type of judicial review 

the department envisions?

Answer: 

The Department supports providing its employees with an opportunity for judicial 

review of certain agency actions. As the proposed regulations state however, OPM 

and DHS lack the statutory authority to confer jurisdiction to hear appeals in the 

U.S. courts of appeals or the U.S. Court of Appeals for the Federal Circuit. The proposed regulations specifically sought public comment on this issue and we hope to 

be able to identify a strategy for ensuring judicial review similar to what employees 

currently have.

12. The new personnel regulations create a new pay for performance system and pay banding for all DHS employees. 

Has there ever been a study, report or private sector analysis on how a 

pay for performance pay system would work in a law enforcement setting 

where teamwork is essential?

Answer: 

Performance management systems used to reward employees are not inherently 

structured to focus on individual performance. Many such systems require that employees exhibit such behaviors or skills as ability to work within a team, efforts to 

foster team building and interaction, etc. Such systems can provide rewards based 

on the accomplishments of an organizational unit or a team. The design efforts currently under way at the DHS are mindful of the critical need for employees to work 

together in teams particularly in the law enforcement arena. Thus, the performance 

management system that will be developed and the pay for performance system associated with it will include the kinds of elements that will foster this close working 

relationship, while emphasizing individual achievement where this is appropriate, 

e.g., in administrative support occupations, or scientific research.

13. In addition how will a supervisor be able to accurately assess the performance of an employee who they might see only a few times a year?

Answer: 

The envisioned performance management system will allow managers and employees to collaboratively plan performance objectives that are linked to the Department of Homeland Security Strategic Plan. Several things can be done to help a supervisor to accurately assess the performance of an employee that the supervisor 

might see only a few times each year, including visits to the remote worksite where 

the employee is located. Supervisors will be required, based on the language in the 

proposed regulations, to provide periodic feedback to an employee on his or her actual performance as compared to the supervisor’s performance expectations, including one or more formal interim performance reviews during each appraisal period 

(5 CFR 9701.407(b)); review of work products that an employee produces, including 

activity reports, investigative case reports, and the like; and, discussion of employee 

work with peers and customers. In addition, an employee, under procedures being 

developed, will be asked to provide input to the performance appraisal in order for 

the supervisor to have as complete a picture of the employee’s accomplishments as 

possible. 

QUESTIONS FOR THE RECORD FROM THE HONORABLE SHEILA JACKSON-LEE

Transformation of DHS 

14. What are the most pressing management challenges facing the department, and what is currently being done to address them? What are the key 

barriers you face in meeting these challenges?

Answer: 

To develop our organization’s capacity for change and to speed our integration, 

there are several management challenges that are currently being addressed 

through the office of the Under Secretary for Management (OUSM). DHS has now 

reached the next level of sophistication in its evolution as a Department. Achieving 
55

management efficiencies and improvements, as envisioned by the Homeland Security Act, are a key linchpin in the overall strategic effort to create one DHS and 

should be coordinated by a cohesive organization to ensure maximum return on investment. 

We are blending 22 distinct agencies and bureaus, each with its employees, mission, and culture, into a single, unified Department whose mission is to secure the 

homeland. Simultaneous with that harmonization and integration effort, we are devising new processes and infrastructure to integrate the Departmental offices. primary focus in OUSM is Business Transformation. We need to transform multiple 

legacy business practices, and their legacy infrastructure, into harmonized or single 

business practices across the enterprise. We have the opportunity to build the 21st 

century department and that will be accomplished by business transformations. Examples of enterprise-wide transformations include eMerge 2 (Electronically Managing enterprise resources for government effectiveness and efficiency); MAXHR (the 

unitary human capital management system) and, the Homeland Secure Data Network (HSDN) (secure communications backbone for not only the DHS enterprise but 

also secure communications with all federal, state, local and tribal Homeland Security stakeholders. Integrating our actions and making DHS a cohesive, capable and 

service-oriented organization whose cross-cutting functions are optimized to protect 

our nation against threats and effectively respond to disasters is one of our Guiding 

Principles in the DHS Strategic Plan. 

These programs are currently being executed with varying degrees of management integration and consistency across lines of business, including formal risk assessment, integrated timelines and cohesive measurement activities. We continue to 

aggressively solve immediate and real business gaps while at the same time, defining and implementing new business operations and building Department wide infrastructures and processes. As a result, we require a formalized and systematic approach for defining, chartering, supporting, synchronizing, and measuring change 

programs for the foreseeable future.

15. Does DHS have an overall plan or strategy to integrate the department, with implementation goals and a timeline, and has it dedicated a senior leadership team to lead and manage the integration and transformation 

process?

Answer: 

The Department of Homeland Security (DHS) was established to bring together 

various federal organizations with homeland security functions and to ensure the 

integration of their operations to achieve the Department’s common mission of leading the unified effort to protect America. Since its inception in March 2003, DHS 

has continued to work towards the comprehensive integration of the original 22 

agencies that were combined to create the Department. The creation of functional 

directorates and the restructuring of legacy organizations is the foundation for this 

integration. The Department’s Strategic Plan and the seven key priorities identified 

for the second year serve as the unifying core of our continuing commitment to coordinate and integrate the missions of our five directorates and three distinct reporting agencies. The Secretary’s key priorities includes specific actions that the Department is committed to achieve by March 1, 2005, and lay the foundation for 

longer-term federal, state, and local integrated initiatives that significantly enhance 

homeland security capabilities throughout the nation. 

In December of 2003, the Secretary created an integration staff that would help 

the Department achieve seamless mission and operational planning across the five 

directorates and three distinct reporting agencies. The Headquarters Operational 

Integration Staff (I–STAFF) was formed to assist the Department’s Leadership 

Team in coordinating and integrating department programs and missions at the 

headquarters level, as well as vertically at the regional level. The I–STAFF is also 

charged with the planning and implementation of a unified DHS regional structure.

16. How is DHS balancing its efforts to integrate the department with ensuring the continued delivery of services of its legacy agencies? How is 

DHS ensuring the balance between its homeland and non-homeland security missions?

Answer: 

The continued integration of Department programs enhances the delivery of services to external stakeholders by building a cohesive and coordinated Departmentwide operational mission that supports our goal of leading the unified effort to protect America. The five programmatic directorates and three distinct reporting agencies are charged with coordinating a broad spectrum of homeland security missions 

which include securing borders and transportation systems, maritime security, re-
56

sponding to and recovering from all-hazards incidents, critical infrastructure protection, information analysis, and scientific research and development. The I–STAFF 

ensures that these homeland security missions are coordinated and integrated horizontally across all DHS headquarters directorates and distinct reporting agencies, 

and that integrated departmental efforts are conducted at the field and regional 

level. In addition, the I–STAFF is helping to build Department-wide capabilities by 

ensuring the seamless integration of threat monitoring and operational response activities; formalizing the processes and protocols to enable executive decision-making 

during periods of heightened alert; establishing a process for headquarters and regional participation in the National Homeland Security Training and Exercise Program; and developing a comprehensive regional implementation plan that facilitates 

the Department’s transformation toward a fully-functioning DHS regional structure. 

While homeland security missions are the critical priority for the Department, 

non-homeland security missions are an integral part of the Department’s efforts to 

support the National Strategy for Homeland Security.

17. GAO has noted that one option could be adopting the Chief Operating 

Officer concept to elevate and integrate key management and transformation efforts, and to institutionalize accountability for achieving these 

changes. Has DHS considered implementing such a position?

Answer: 

The Director of the I–STAFF is charged with leading the effort to integrate crossdirectorate strategic, operational and contingency planning; providing synchronized 

support for operational response and crisis decision making; managing national 

homeland security education, training and exercise programs and leading the development, implementation and oversight of the DHS regional structure. Through the 

implementation of I–STAFF programs and initiatives, the I–STAFF Director establishes the mechanisms and protocols that ensure that programs and operations are 

integrated into a cohesive Department-wide operational vision that supports the 

unified DHS mission. The I–STAFF Director reports directly to the Secretary of 

DHS.

18. Have DHS’s employees and other interested parties been involved and 

engaged in developing the department’s integration and transformation 

strategy? How has this strategy been communicated to DHS’s employees 

and to other interested parties?

Answer: 

DHS employees from every directorate and distinct agency have played an integral role in realizing the Department’s promise to achieve seamless mission planning and execution in helping to achieve the ultimate goals of preventing and deterring terrorist attacks and protecting and responding to threats and hazards to the 

nation. The I–STAFF alone is composed of approximately 50 DHS staff detailed 

from every directorate, agency and office within the Department. As representatives 

of their respective directorates, agencies and offices, these individuals form the nucleus of an integrating and coordinating staff that promotes interdepartmental and 

interagency initiatives that enhance homeland security missions throughout the nation. In addition, DHS employees within the field and regional offices have formed 

local coordination networks that integrate varying operational missions within specific cities and regions to ensure the effective and efficient delivery of homeland security services to our external stakeholders. 

DHS employees are kept informed of transformation and integration initiatives 

through a number of communications methods including memoranda from the Secretary, directives and guidance from Under Secretaries and agency heads, weekly 

newsletters, informational e-mails and the DHS web site.

19. DHS recently released a strategic plan that sets forth goals and broad 

objectives for the Department. How is this plan being integrated into the 

Department’s planning processes and operations to make achievement of 

these goals a reality?

Answer: 

The Department has prepared a Future Years Homeland Security Program 

(FYHSP)—a five-year resource plan that reflects the vision of how we intend to preserve our freedoms, protect America, and secure our homeland. The Department’s 

strategic plan is the basis for the FYHSP. This FYHSP will ensure the Department 

takes a strategic approach to budgeting and a long-term view in developing the Department of Homeland Security program priorities and operational strategies. As a 

planning document, the FYSHP is the culmination of efforts to examine departmental priorities and the five-year ramifications of program and budget decisions. 

Our strategic plan is the roadmap for the Department and provides the cornerstone 
57

of the FYHSP. This year’s FYSHP reports how our five-year budget links directly 

to our strategic goals. The Department will review priorities and plans yearly with 

a long-term view of where we want to go and the best way to get there and adjust 

subsequent FYHSPs accordingly. 

Great strides have been made in instituting a comprehensive and cyclic planning, 

programming, and budgeting system to align the Department’ five-year resource requirements with strategic goals in light of competing programmatic priorities and 

limited resources. However, the Department is continuing to further assess and refine programs and activities and their potential impact on upcoming budget requests. 

To support development of the FYHSP, the Department implemented a comprehensive Planning, Programming, and Budgeting System (PPBS). The PPBS is a 

strategic decision-making process. It links strategic direction in light of threat assessments and resource constraints to the thousands of detailed readiness actions 

needed to meet the missions of the Department of Homeland Security. 

In addition, the Performance Budget Overview (PBO), the annual performance 

plan sent to Congress with the President’ Budget, is organized by strategic plan 

goals. The fiscal year 2004 PBO shows how each program supports DHS goals, as 

well as program performance goals and measures. Throughout the year, progress is 

monitored by a Quarterly Performance Report, again organized by strategic goals 

and objectives. Each program reports on its key performance measures, with a consolidated report provided to senior leadership for review and assessment of progress 

in meeting our FYHSP and strategic plans.

20. The department has experience significant turnover among the senior 

executive ranks in key positions. Since DHS opened its doors, divisional 

CIOs have turned over at a rate of 45 percent. How is DHS ensuring that 

continuity of leadership remains intact during this critical period of transformation?

Answer: 

Our current executive recruiting strategy continue to attract highly qualified and 

diverse applicants. Leadership positions are filled quickly. DHS has also established 

a workforce planning process that helps us identify potential occupational gaps in 

our key leadership positions. We have created a One DHS leadership model to ensure that our leadership pipeline is prepared when future leadership positions become available. We are also at the beginning stages of designing and developing a 

One DHS Leadership curriculum and a One DHS Senior Executive Service Candidate Development Program. Assisting with retaining key leaders is our new pay 

and performance system for Senior Executive Services members. Pay will be based 

on individual performance and/or contribution to the agency’s performance. The Department will be able to ensure that those senior executives demonstrating the highest levels of individual performance will be rewarded appropriately. Once the Department receives certification from OPM, the pay cap will also be raised to the Executive II level which will be an incentive for the senior leadership.

Financial Systems 

22. In March of this year, DHS announced a hiring freeze at two of its 

frontline units, CBP and ICE because accounting staff were uncertain if a 

potential $1.2 billion budget shortfall was real or an accounting glitch. DHS 

reportedly has three different pay systems that do not use the same budgeting principles and budget codes. What is the department doing to better 

integrate its financial systems to ensure that such an incident is not repeated?

Answer: 

Staff from the Department’s Office of the Chief Financial Officer (CFO), Border 

and Transportation Security (BTS) Directorate, and the U.S. Citizenship and Immigration Services (USCIS) have briefed your staff on the circumstances and facts surrounding the alleged $1.2 billion shortfall as reported by The Wall Street Journal.

The Department also established a review team composed of staff from the CFO’s 

Office, BTS, USCIS, and the U.S. Coast Guard to assess the situation. The review 

team engaged in a detailed budget reconciliation effort between the three bureaus. 

The team examined the allocation of resources and services throughout the three 

bureaus, and this effort resulted in an immediate internal realignment of $212 million. A subsequent internal realignment of approximately $270 million is possible, 

pending additional discussions and coordination on the final documentation and billing. There is no $1.2 billion shortfall as reported by The Wall Street Journal. 

The Congress has recognized that funds may need to be realigned between ICE, 

CBP, and USCIS. In the Joint Explanatory Statement (H. Rpt. 108–280) accom-
58

panying the Department of Homeland Security Appropriations Act 2004 (Pub. L. 

108–90), the Congress recognized that the budgetary resources may need to be realigned. Specifically, the Congress noted: ‘‘The conferees are aware that the Department is conducting a comprehensive review of administrative and other mission responsibilities, particularly as they affect ICE and other agencies that have inherited 

multiple legacy missions. While funding provided by this conference agreement is 

based on the best possible information available, the conferees understand there may 

be a need to adjust funding to conform to the decisions resulting from the review.’’

A similar statement was included under the heading discussing CBP. 

While unrelated to the budget review discussed above, when DHS was established 

just over one year ago, it blended 22 distinct agencies and bureaus inheriting a myriad of redundant management functions, processes, and systems: for example, 40 

general ledgers, 30 different procurement processes, and 20 different approaches to 

managing travel costs. In fiscal year 2005 DHS will implement the new finance/accounting/budget resource management system, eMerge2 (Electronically Managing 

Enterprise Resources for Government Efficiency and Effectiveness), that will transform disparate business and financial management systems into one, uniform, electronic solution for the Department. It will support a ‘‘one environment’’ model with 

common core processes that is critical to the success of DHS. eMerge2 will provide 

decision-makers with critical business, budget, accounting, procurement, grants, assets, and travel information in near ‘‘real time;’’ and eliminate stovepipes between 

components. 

The Department is committed to the security of the nation and we will continue 

to work towards successful operation of the three bureaus—CBP, USCIS, and ICE. 

To that end, we will continue to work with the Congress, to ensure that funds are 

aligned to mission objectives and are consistent with congressional intent.

23. What is the implementation milestone for the ‘‘eMerge’’ system and 

are there factors impeding its development and implementation? Specifically, how will DHS use the $56 million requested for fiscal year 2005?

Answer: 

eMerge2 has a planned implementation strategy involving three phases. The 

phases were designed around the unique needs of each of the organizational entities 

making up DHS. The three phases are as follows: 

o Phase I—Most in Need.... Building the Foundation; targeted for implementation beginning Fall 2004

o Phase II—Improving Functional Integration.... Migrating to Standards; 

targeted for implementation beginning Spring 2005

o Phase III—Providing for Uniqueness.... Unifying Operations; targeted 

for implementation beginning Fall 2005

The solicitation will require a proposal for the solution and specific implementation plans and timetables.

At this point, there are no significant impediments to development and implementation, however the eMerge2 program does employ a risk management effort and 

has identified several significant risks to which the program is sensitive. A few of 

the more critical risks are: 

o Budget—Obviously, any reduction in the current budget would seriously impact the program. 

o Infrastructure Readiness—eMerge2 is dependant upon the readiness of the IT 

infrastructure to support implementation. Any risks associated with IT infrastructure rollout ultimately affect eMerge2 rollout. 

o Stakeholder Resistance—Any large implementation project always runs the 

risk of stakeholder resistance. eMerge2 therefore, is employing a comprehensive 

change management plan, addressing issues through careful analysis, outreach, 

training and interaction. 

The eMerge2 budget for fiscal year 2005 will be applied to the following areas: 

We will continue to refine the business requirements, acquire and implement a solution, perform a gap analysis at each implementation site, make preparation for data 

migration, and employ portfolio analysis, communication and change management 

and program administration.

24. The DHS/IG reports that in its first audit of the department’s financial 

statement, KPMG rendered a qualified opinion and cited several internal 

control weaknesses for the financial systems. How is DHS working to correct these problems?

Answer: 

The Department’s fiscal year 2003 Performance and Accountability Report includes the auditor’s report on internal control. The fiscal year 2003 report presented 
59

a total of 14 weaknesses in internal control, seven of which are considered material 

to the consolidated financial statements. In response, the Department’ CFO has required each affected organization to develop detailed, measurable clean action plans 

(CAP) to resolve and correct these weaknesses, including weaknesses in information 

controls in its financial systems. Commencing April, the CFO initiated monthly CAP 

meetings with each DHS organization CFO to discuss the status of action and underlying milestones to resolve these weaknesses. All CAP actions must be sufficient 

to enable the auditors to complete their testing to the extent necessary to render 

an independent report containing an opinion on the consolidated financial statements, among other things, and a report on internal controls by the accelerated due 

date of November 15, 2004. To date, Department organizations are making measurable progress in addressing weaknesses specific to their organization. The Department’s CFO implemented an automated tracking system for use in monitoring individual weaknesses in internal control at the organization level. The CFO anticipates 

rolling this system out to the organizations in the near future for their use in tracking organization weaknesses in internal control that may not warrant tracking at 

the Department level.

25. DHS is the largest federal agency that is currently not under the 

Chief Financial Officer Act of 1990. In light of this, what steps is the agency 

taking to ensure its compliance to appropriate laws and guidelines governing federal financial management?

Answer: 

The Department’s CFO chairs the Department’s CFO Council. The CFO Council 

has a mission and agenda similar in scope with councils chaired by CFOs at CFO 

Act agencies. The CFO Council is comprised of senior management officials from 

each of the Department’s directorates, bureaus and offices. The council’s primary 

purpose is to advocate financial management across the Department, including compliance with applicable laws and regulations. Within the CFO’s organization, the Director, Office of Financial Management, chairs the Department’s Financial Management Working Group. This group, which also serves as the Department’s Accounting 

and Auditing Committee, comprised of Department managers responsible for federal 

financial management in the Department, develops and promulgates Departmentwide financial policy and accounting standards in such areas as the Debt Collection 

Improvement Act, the Federal Managers? Financial Improvement Act, Improper 

Payments Information Act, among many others. The working group also conducts 

special studies into all exposures drafts issued by central agencies that impact the 

Department’s financial management operations. The working group supports the 

basic premise that financial management is a responsibility shared by all offices.

Proposed Human Capital System 

DHS is currently developing final regulations for a pay and performance management system for employees. The President’s fiscal year 2005 budget requests $102.5 

million for this effort. Under the system, the GS grade and step configuration would 

be replaced with pay bands, with performance-based pay increases, that will be applied to newly-formed occupational ‘‘clusters’’. The proposed regulations would also 

impose new requirements on collective bargaining and the Department’ handling of 

employees’ adverse actions.

26. What is the status of issuing final regulations for the new system and 

what key barriers confront the department as it moves toward their adoption?

Answer: 

The final regulations for the new DHS human resources system were posted at 

the Federal Register on January 26, 2005. 

While a number of challenges will confront DHS once the final regulations are 

issued and the Department begins system development and implementation, the 

main challenge is to complete training and development of our managers and supervisors, who will be required to make the critical day-to-day decisions.

27. How is the department ensuring that the rights of employees are preserved under the new system and how are the views of the groups representing DHS employees and the federal workforce being considered in 

the process?

Answer: 

The Homeland Security Act of 2002 requires DHS to adhere to merit system principles and to avoid prohibited personnel practices. 

Employee involvement has been a critical component to date and will continue to 

be so. DHS has honored its commitment to a collaborative process through commu-
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nications to all stakeholders regarding the design, development, and implementation 

of the new human resources system. A formal meet and confer process with employee representatives, as required by the Homeland Security Act, began in June 

and concluded in August. It has been followed by continuing conversations with employee representatives.. The Department is providing weekly newsletters, and announcements on the DHS internet website. An email address was created to solicit 

input from employees, and there have been hundreds of questions and comments 

submitted.

Contract Management 

The DHS/OIG has reported that a major challenge for the department is the management and identification of procurements, with DHS struggling to compile and 

maintain a detailed and accurate listing of its contracts. The DHS/OIG has also reported that during its first year of operation, the Transportation Security Agency 

(TSA) relied extensively on contractors to accomplish its mission, but some contracts 

were written without clearly defined deliverables, and TSA lacked staff to provide 

adequate oversight.

28. What is the department doing to improve its procurement operations, 

including merging in contracts from legacy agencies, to ensure that it has 

appropriate control over this function?

Answer: 

Many significant actions have been accomplished to date to improve the overall 

operation of the Department’ procurement function. These include: 

1. Issued the Homeland Security Acquisition Regulation (HSAR). The HSAR supplements federal regulations and promulgates specific DHS policies, procedures and 

delegations. This represents another major step in combining cultures of disparate 

agencies and ensuring consistent operation under a single, DHS-wide procurement 

regulation. 

2. Established department-wide program for strategic sourcing and supply chain 

management. Specifically, 16 cross-functional commodity councils have been tasked 

to create sourcing strategies for goods and services acquired throughout the Department. Councils govern a wide range of requirements, from simple items such as office supplies, to more sophisticated requirements, such as boats and their maintenance or complex IT infrastructure needs. 

3. Established a comprehensive Investment Review Process (IRP). The IRP integrates planning, controls, budgeting, acquisition, and the management of investments to ensure public resources are wisely invested. The IRP is predicated on the 

principle that cross functional teams are necessary for the proper program management throughout the entire acquisition life-cycle. The Investment Review Board 

(IRB) that manages this process is chaired by the Deputy Secretary. 

4. Created a robust and innovative Small and Small Disadvantaged Business outreach program. The program includes dependable guidance on marketing to DHS 

while providing abundant opportunities for small businesses to engage both federal 

government representatives and large business concerns interested in their supplies 

or services. 

5. Developed a strategic acquisition workforce career development plan that addresses education, training and experience requirements for the entire acquisition 

workforce as well as recruitment, retention, intern and certification programs. 

6. Finally, the Chief Procurement Officer is in the process of developing a comprehensive oversight and compliance program to be used in the assessment of all 

DHS acquisition functions. The program will be multi-faceted and will include the 

use of the Government Accountability Office framework, on-site reviews of our operational procurement offices, and performance measure and metrics.

29. The Chief Procurement Officer (CPO) does not have direct line authority over procurement operations for legacy agency components inherited by DHS, and the office is experiencing staffing shortages. How does 

the department plan to further empower the CPO and address its resource 

problems for the procurement function?

Answer: 

The CPO commissioned a study to determine the number of operational contracting positions that are required to support the functions that transferred into 

the Department without this support. We are currently discussing this study with 

the affected organizations and working quickly to finalize the numbers and begin 

immediate recruitment of the necessary contracting professionals. These individuals 

will be placed in the Office of Procurement Operations in DHS headquarters. This 

office reports directly to the Chief Procurement Officer. 
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The remaining seven operational activities do not report directly to the CPO; however, all contracting authority is granted through the CPO and the CPO retains 

oversight responsibility for these organizations. That said however, we are currently 

analyzing options to determine the feasibility of creating a direct reporting relationship to the CPO.

Information Technology 

30. Do you worry that the Enterprise Architecture (EA) is a sufficiently 

robust tool to drive needed IT integration within DHS in light of the fact 

that, according to GAO, less than 10% of all federal agencies with EAs have 

ever moved past writing EAs to actually implementing plans with tangible 

products and projects?

Answer: 

DHS is developing a business driven, ‘‘actionable EA’’ which integrates traditional 

EA tools with portfolio/performance management techniques to drive mission transformation projects. Mission transformation guides where IT integration must occur 

to meet mission requirements. These portfolios of projects will then be continuously 

assessed for their likelihood of enabling the department to achieve its strategic goals 

and objectives. Our EA work to date points to several potential transformation programs. One example is an Enterprise Services portfolio, which will be driven by the 

CIO to create ‘‘One IT Infrastructure’’ for the department to integrate networks, 

email, data centers, and operations centers. Another example is a Traveler portfolio, 

which will be driven by the Under Secretary for Border and Transportation Security 

to facilitate the lawful movement of people across our borders and via our transportation systems and will focus on screening and credentialing technology integration. 

Using EA in this fashion has resulted in tangible products and projects for the department.

31. Does the DHS Chief Information Officer have sufficient power to 

drive IT integration within DHS they do not even have direct line authority over divisional Chief Information Officers and all of the systems and 

projects that they manage?

Answer: 

The DHS CIO plays a key role in all levels of the department’s investment review 

process. The CIO serves as a member of the department’s Investment Review Board 

and, is the Chair of the Enterprise Architecture Board. In these capacities, the CIO 

provides input into and influence upon Department-wide IT Investment decisions. 

The CIO has recently established the Infrastructure Transformation Office, the goal 

of which is to transform the multiple IT infrastructures within DHS and as required, to direct and manage the change for all infrastructure assets and investments including people, processes, and technologies. The CIO is initiating a process, 

similar to that currently in process in the Infrastructure Transformation Office, 

where projects are managed centrally, inlcuding the management of IT assets, people, processes, practices, funding, and operations, however those assets remain in 

their organization. For example, the ITO is authorized to establish the necessary 

projects and organizational elements required to create the One Network, One Infrastructure. This includes driving and managing the change for all infrastructure assets and investments; including people, processes, and technologies. The CIO will 

leverage the use of Organizational Element staffs in additional areas, such as enterprise architecture and network management, to ensure accomplishment of department-wide IT goals and objectives. 

In addition, the Department has issued a Management Directive that deals with 

the functional integration of the IT functions within DHS. This Management Directive (MD) establishes the Department of Homeland Security’ (DHS) vision and direction on the authorities and responsibilities of the leadership of the Department’ 

Chief Information Officer. It reinforces our commitment to create a unified 21st century department in both mission accomplishment and support systems performance 

as quickly as possible. As such, this directive is the principal document for leading, 

governing, integrating, and managing the IT function throughout DHS. 

The DHS Chief Information Officer (CIO), through the functional integration concept, will be held accountable for designing the system to optimize the IT function, 

setting the standards for functional performance, creating the department-wide policies and processes, providing the automated solutions to yield greater efficiencies, 

and nurturing the development and success of centers of excellence. Organizational 

Element heads will likewise be accountable to support these progressive business 

functions as a key part of their commitment to mission accomplishment.

32. According the DHS Inspector General’s office, turnover among divisional Chief Information officers has been 45 percent since DHS opened. 
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Can you help us understand why turnover has been so high, and how DHS 

can make important progress on integrating IT systems when it can not retain its top IT executives?

Answer: 

DHS is facing, as are many other federal agencies, a ‘‘graying’’ of the workforce. 

Many of the senior executives in the IT community are either eligible to retire, or 

are within several years of being eligible. These retirements will have a severe impact on the IT senior leadership; this event highlights the importance of having succession and career planning strategies to develop and retain the more junior members of the workforce; it is that junior workforce who must be equipped with the 

knowledge and skills to move into senior management positions. To this end, the 

DHS CIO Council has identified as one of its top priorities IT Human Capital. This 

initiative is focused on identifying the current skills available within the DHS IT 

workforce, and providing the training and development needed for IT employees to 

move into senior leadership positions.

33. It is our understanding that DHS is falling short on a number of basic 

technology projects that would improve DHS daily operations. DHS has 

still not rationalized such basic systems for its own employees in important 

administrative areas like accounting, acquisition, procurement, grant management, asset management, and budgeting and cost-accounting. What role 

did poor systems integration play in the recent discovery of a $1.2 billion 

budget shortfall in DHS’ Immigration and Customs Enforcement (ICE) and 

Customs and Immigrations Services (CIS)?

Answer: 

DHS recognizes the value and importance of integrated systems of accounting, acquisition, procurement, grant management, asset management, budgeting, and costaccounting. When DHS was established in March 2003, it blended 22 distinct agencies and bureaus inheriting a myriad of redundant management functions, processes, and systems: for example, 40 general ledgers, 30 different procurement processes, and 20 different approaches to managing travel costs. In FY–2005 DHS plans 

to implement the new finance/accounting/budget resource management system, 

eMerge2 (electronically Managing enterprise resources for government efficiency and 

effectiveness.) This system will transform disparate business and financial management systems into one, uniform, electronic solution for the Department. It will support a ‘‘one environment’’ model with common core processes that is critical to the 

success of DHS. eMerge2 will provide decision-makers with critical business, budget, 

accounting, procurement, grants, assets, and travel information in near ‘‘real time;’’ 

and eliminate stovepipes between components. 

There never was a $1.2 billion shortfall in ICE. However, to examine the budget 

situation, the Department of Homeland Security established a review team composed of staff from the CFO’s Office, BTS, CBP, ICE, CIS, and the Coast Guard to 

assess this situation. The review team engaged in a detailed budget reconciliation 

effort and examined the allocation of resources and services throughout the bureaus.The Congress has recognized that funds may need to be realigned between 

ICE, CBP, and CIS. In the Joint Explanatory Statement (H. Rpt. 108–280) accompanying the Department of Homeland Security Appropriations Act, 2004 (P.L. 108–

90), the Congress recognized that the budgetary resources may need to be realigned. 

Specifically, the Congress noted: ‘‘The conferees are aware that the Department is 

conducting a comprehensive review of administrative and other mission responsibilities, particularly as they affect ICE and other agencies that have inherited multiple 

legacy missions. While funding provided by this conference agreement is based on 

the best possible information available, the conferees understand there may be a 

need to adjust funding to conform to the decisions resulting from the review.’’ A 

similar statement was included under the heading discussing CBP. 

The Department is committed to the security of the nation and we will continue 

to work towards successful operation of CBP, ICE and CIS. To that end, we will 

continue to work with the Congress, to ensure that funds are aligned to mission objectives and are consistent with congressional intent.

34. Help us understand what you have done and are doing to rectify the 

following problems. It seems hard to believe, but DHS may not even know 

how many employees it has at any given time. In September, 2003, DHS 

CIO Cooper was quoted as saying that, ‘‘The Department keeps a running 

hand-tallied list of its staff, with the total varying from 190,000 to 225,000 

depending on which of the 22 component agencies 24 human resources systems are consulted.’’ Furthermore, pay and personnel systems still need to 

be integrated despite DHS promises to ‘‘[merge] the personnel and pay sys-
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tems of all DHS component agencies into a single system,’’ and that, ‘‘the 

new system was targeted for completion by the end of the [2003].’’ $102.5 

million is requested for DHS Departmental Operations to support the creation of new human-resources systems. Nonetheless, DHS predicts that a 

central administrative system ‘‘may be years away,’’ and acknowledges that 

DHS officials are just beginning to ‘‘set the initial requirements for the 

merger project.’’

Answer: 

We are able to report the number of employees who work for DHS at any given 

time; however at present this reporting requires assembling information from 3 different payroll providers. At the time of its standup, DHS components received payroll services from 8 different payroll providers. Significant efforts during this past 

year have resulted in the consolidation from 8 to 3 payroll providers—the National 

Finance Center (NFC), the Department of Transportation (DOT), and the General 

Services Administration (GSA). DHS intends to move to one payroll provider, and 

the NFC has been identified as the target end-state provider. 

DHS employees serviced by GSA have been converted to NFC in August 2004, 

leaving only DOT payroll accounts to be migrated. Conversion of DOT payroll services this fiscal year is not possible due to various technical and schedule-related 

risks, but is planned for August 2005. DOT provides service to TSA and Coast 

Guard. Until such time as a consolidated database exists for reporting purposes, interim procedures have been established to receive bi-weekly data feeds from DOT, 

providing us with consolidated workforce information. 

With respect to broader HR enterprise technology solutions, DHS plans to partner 

with the OPM/OMB ‘‘HR Line of Business’’ initiative to identify and deploy an integrated human resources system. The current schedule for deployment includes a 

prototype in early fiscal year 2005, with a rapid implementation during 2005–2006.

35. The President’s budget request for fiscal year 2005 includes $4.4 billion for information technology spending at the Department of Homeland 

Security. Of that, $226 million is requested for ‘‘Department-wide Technology Investments’’ for ‘‘cross-cutting initiatives that help the 22 pre–DHS 

components merge into one.’’ Please provide detail on the major components of that $226 million, and whether the CIO has direct and authoritative control over those dollars.

Answer: 

The CIO, through allocations to him, has direct control and is responsible for executing the Department-wide IT Investment fund. In fiscal year 2005, approximately 

$226 million was requested for the Department-wide Information Technology Investments account, including $100 million for Wireless activities, $31million for Security 

Activities, and $95 million for Information Technology services. The wireless funding is being used to replace legacy border components, specifically to upgrade and/

or replace older infrastructure components and for the enablement of enhanced capability and broader coverage. The wireless activities include funding for new investments in radio infrastructure along the nation’ borders; which continues an effort to coordinate wireless initiatives and infrastructure across federal, state, local, 

and tribal government. A total of $31 million is being used for Security Activities, which includes: 

$10 million to support the Federal Watch List and Integration program. fiscal 

year 05 activities include: • establishing operational system interfaces for DHS organizations that receive 

data from the Terrorist Screening Center for use in watch list operations; 

• completing the development of the To–Be model for enhancing DHS processes 

that employ data from the terrorist screening DB; 

• developing the plan to move to that To–Be environment; and construction of 

plans for the use of biometrics in terrorist screening $21M to support the Homeland Security Information Technology and Evaluation 

Program. fiscal year 05 activities include: • the Office of the Chief Information Officer (OCIO) partnering with the Office 

for Domestic Preparedness (ODP) in managing the Homeland Security Information Technology Evaluation Program (ITEP). 

• State Administrative Agencies (SAAs) will be encouraged to submit candidate 

information technology demonstration projects. The fiscal year 2005 ITEP 

projects will build on those of fiscal year 2004 to further demonstrate novel uses 

of existing, ‘‘state-of-the-market’’ information technology to remove one or more 

significant barriers in homeland security mission critical areas. 

$95 million is being used for general information technology investments. 

$ 9 million is being used for Enterprise Architecture (EA) efforts in order to: 
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• develop, implement, and maintain a comprehensive and integrated EA; • establish processes for maintaining and maturing the EA; • develop a decision support methodology to select, control, and evaluate DHS 

Information Technology (IT) investments; 

• develop a detailed master plan for the alignment of IT investments with the 

EA business and data model. 

$4 million is being for our Enterprise Service Delivery Environment (Portal Technologies) to: • support information sharing by integrating current internal and external 

websites to be more customers focused; 

• enhance the core enterprise service delivery environment. $5M is being used to support the Department’ Geospatial Activities, which include: • collaborating with the Wireless Program Office on a joint IT initiative. The 

GeoWireless Program initiative is centered around three pilot projects designed 

to effect an operational decision support capability utilizing interoperable wireless and geospatial technologies. These projects include: 

o Miami Situational Awareness—Combination of geospatial and wireless 

technologies providing situational awareness, strategic and tactical decision 

support capabilities for the combined Miami Air and Sea Port facilities. Enable delivery of and remote update of decision support capability, and enable real time situational awareness. 

o ENFORCE Case Management System—Spatially enabling the ENFORCE system, and leveraging wireless and geospatial technologies to enable remote update and access. Enable interoperable interaction with critical decision support systems with a spatial and temporal context. 

o Geospatial Service Center—Create internet enabled geospatial mapping 

and information services which deliver critical information to remote service points, and further extend services through wireless technologies, to the 

field. Enable delivery of and remote update of decision support services, and 

enable real time situational awareness.

$56 million is being used to develop and integrate the Department’ financial management system (eMerge 2)

$21 million is being used to support the Department’ Human Resources IT Systems, 

which includes: • awarding a contract to support design, development, and implementation of 

new HRIT system; 

• developing governance models, configuration management processes and 

other program management processes

36. How is DHS addressing the following urgent IT—related problems 

highlighted by the IG and in the press: 

According to the Inspector General’s office, ‘‘the lack of an agreed upon 

IT infrastructure’’ prevents the Office of Information Analysis’s Risk Assessment Division from communicating ‘‘with [state, local, and private sector] partners inhibits the exchange of information;’’ 

According to the Inspector General’s office, IAIP officials have ‘‘expressed concerns that IAIP lacked connectivity to access sensitive databases maintained at other federal agencies, thus hampering their efforts to 

conduct business on a daily basis;’’ and 

According to Information Week, the office of the CIO has had problems 

sending or receiving secure email.

Answer: 

The CIO has recognized that in order to address the challenges noted above, there 

was a need to create an organization which would have full authority to transform 

the multiple IT infrastructures within DHS and as required, directing and managing the change for all infrastructure assets and investments including people, 

processes, and technologies. The CIO established the Infrastructure Transformation 

Office (ITO) with full time representation from the major organizational elements 

with the responsibility to establish the department’ single IT infrastructure. The 

ITO Program, under the direction of the CIO and with the advice of the DHS CIO 

Council is responsible for program management and implementation of the DHS 

wide ‘‘One Network, One Infrastructure.’’ 

The objective of the Infrastructure Transformation Program is to centralize management of IT assets, people, processes, practices, funding, and operations in order 

to achieve improved IT Infrastructure interoperability. The ITO is authorized to establish the necessary projects and organizational elements required to create the 

One Network, One Infrastructure. This includes driving and managing the change 
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for all infrastructure assets and investments; including people, processes, and technologies.

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